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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (5425)	5/27/1999 11:16:00 AM
From: MrGreenJeans	Read Replies (1) \| Respond to of 15132

Federal Reserve...continued... None of those purposes fall within the lawful mandate of the Fed. Just what is the lawful mandate of the federal reserve? Is it to promote price stability and full employment, to help the government handle its transactions, to coordinate and control the commercial banks, to help control the nation's money supply and credit conditions, to target interest rates (Paul Volcker)?? It is all of the above and more. While I agree that Greenspan should let the financial markets do what the financial markets are going to do and let them find an equilibrium wherever they may I suspect he will intercede at some point to slow down the wealth effect which is everywhere, just check on the big ticket items your neighbor is buying these days or better yet check the airfares here and abroad, in order to cool off the economy. Further, taking a longer time horizon, according to Goldman Sachs the Federal Reserve has moved towards a tightening bias 29 times and has increased rates 50% of those times subsequently.

To: Ian@SI who wrote (5425)	5/28/1999 12:45:00 AM
From: Carl R.	Read Replies (2) \| Respond to of 15132

Whoa, Ian. The lawful mandate of the Fed does include maintaining orderly financial markets. The FED most certainly does have power to curb rampant speculation and unsustainable prices in financial markets if they perceive them to be a problem. In fact they have some special tools in their arsenal to deal with exactly that problem. Keep in mind that they determine the margin percentage for example. If they want to reign in equity markets and not impact business lending they could change the margin loan limit to 50%, for example. It is a fact that in the past major technological changes have usually led to greed, rampant speculation and then depression. AG will avoid this, if he can. Carl