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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (862)	3/26/1999 6:47:00 PM
From: Henry Volquardsen	Read Replies (2) \| Respond to of 2794

I understand why they often do it. What I am wondering is whether they would they do the same with their personal accounts. What do you mean by their personal accounts? I sense there is non-free market aspect to this intervention that serves to NOT achieve the balance you are talking about. Intervention is by definition a non-free market event. And yes the market does not achieve the balance it would in a free market. I hope I wasn't misleading. I wasn't making a comment on the appropriateness of intervention, I was making a technical evaluation. For purposes of the theory the central bank acts as an investor and has the same impact in the equation as any other investor. From a theoretical perspective there is no need for the balance to be determined by a free market. The question of how the balance should be achieved is a separate issue. Personally I think the central bank intervention often creates more volatility than it prevents. Last year's emerging Asian currency debacle is a prime example. The free market would find the balance more efficiently. But that is just my opinion.