"RIMme" <****teigh@[EMAIL PROTECTED]
> wrote in message
news:29b19788-d3dd-4a96-a875-6c3767943f97@[EMAIL PROTECTED]
> ***
>
> "Fed makes moves again, Stock Market Soars"
>
>
>
>
>
> THIS HAPPENS EACH TIME THE FED MAKES THESE MOVES!
>
> Remember?
>
> TOMORROW, the markets will again recede, and by week's end the DOW be
> back below 12,000 -- where it belongs, until it falls further.
>
> AND NO -- BUSH has nothing to do with -- nor the brain to -- make
> these "adjustments," which, in the long run, you'll see had little
> success in combating the RECESSION.
>
> ***
I agree, Bush had little, if anything, to do with these adjustments. I
disagree that the affects in battling recession will be small. Recession
by
definition is the polar opposite of inflation, and decreasing the cost of
money by definition is inflationary. Causing inflation then, by
definitiion,
has to be an effective tool against recession. The question is, will it
work?
I get the whole idea behind raising and lowering interest rates, what I
don't get is the speed with which the affect should take place. Consider
the
boiling pot of water -- when you turn the flame down it takes a few
minutes
for the water to return to room temp. The goal is to keep the water warm
but
not hot. You can turn the flame back a tick or two, and the water is still
heating, turn the heat back another tick or tow and the water is still
heating but slower, another tick then another. Finally the flame is off
but
the water is still hot you start tossing in a few ice cubes, then a few
more, then a few more. Suddenly you notice the water is not only cooling,
it
is actually below room temp so you reach for the gas knob and crank it
wildly to high.
The changes in economic activity behave somewhat the same as changes tothe
pot of water.
It is my humble belief that the powers-that-be are cranking the knob too
far
too fast and throwing in ice cubes by the buckets full, but they are not
watching the pot to see what is happening to the water. Instead of 1/4
point
adjustments every 90 days, I would suggest that 1/2 or 3/4 point
adjustments
at 180-day intervals would be a better way to regulate the money markets.
Too little too often too many times can be as bad or worse than too much
not
often enough.
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