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Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (45179)	6/7/1999 9:14:00 AM
From: Cynic 2005	Read Replies (2) \| Respond to of 86076

<<The sole reason the US economic system has the Fed is to intervene when in their independent opinion the free market equilibrium has become hazardous for the future state of the economy. >> I do not belive it is true. Though this is true. <<..it is chartered to pump in money when the market decides to pump liquidity out and the reverse holds as well.>> <<If enough big banks collapse, the economy collapses. >> The Feds have a duty to PREVENT the banks from making stupid mistakes. In the process, several time they have had to tighten the monetary policies at the risk of recessions. It is a bitter medicine for the economy but they still have to give it. Since the LTCM near collapse, show me one policy the Feds have adopted to prevent an event like that recurring. <<As for the margin issue, the problem is one of lack of education. Today's individual investors (and that includes many many bears - realists, if you prefer - on this thread, I must add) have very little undertanding of what risk is (yes, the risks of buying options are not very different from going into margin). That has got nothing to do with when the market crashes. That has to do with brokers advicing clients about what the worst case scenerio may be. >> To certain degree I agree. I can't speak for the others, but when I buy options, I do very well understand the fact that I can lose all of my premos. But a few good winners are good enough to make me come-out ahead, even considering the wipeouts on others. The Feds have an obligation to prevent people from hurting themselves. All the claims of the Fed heads that they have learned from past (esp 1929) mistakes is just hog wash. Over the centuries one thing hasn't changed with humans - group psychology. <<I have my own small one and I am happy that my economic situation has been improving by leaps and bounds during the tenure of this Fed. >> In general, an average person's opinion is purely based on his/her own personal situation. If you were to lose your highly paid ERP job an join the ranks of the unemployed, you would hold a different opinion, I am sure. <<In any case, the Fed is an indepedent board. >> LOL. This is why I say that you are too "text book" oriented. There is a lot of political influence on the Feds. Period. Don't look for it in their minutes or press releases. <<It's just that long term I am extremely optimistic about the state of the US and the world economy.>> "I am an optimist" "I think positive" etc. etc. are typical responses from those who would rather "see no evil and hear no evil." A last note on this subject. A while ago I posted a few of my beliefs and called them the "Maxims of the Myth Thread." w.r.t. the economy and stock market, that is where I stand. The basis for my opinions is not simple "uneducated" guesses. I have read enough stuff for my brain cell to form an opinion of my own. In 1997 I was eager to discuss a lot of these issues. Not any more. Why? Simply because I see it as a waste of time.