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  • From: Gene GeRue <genegerue AT ruralize.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] What some of it means
  • Date: Tue, 25 Sep 2007 14:24:50 -0500


On Sep 25, 2007, at 8:43 AM, Don Bowen KI6DIU wrote:

It is all perception or feel good publicity. The Fed wants the stock
market to fly because that number is reported in almost every news
outlet.

I'm about halfway through Greenspan's book. So far, his perception of the stock market has mostly been that he thinks people pay far too much for stocks. Here is a quote: "Even rising productivity could not explain the looniness of stock prices. On October 14, 1996, the Dow Jones Industrial Average vaulted past 6,000 . . . ." (page 174, The Age of Turbulence)

People may not have any money in the market but when the numbers
are flying people feel good about the economy. If the market tanks it is
reported far and wide and people feel bad about the future of the
economy. So the fed bumped up the market, exactly the same thing they did
just after the dot com bust and exactly what fed the housing bubble.

The Federal Reserve Bank has two primary charges: restrain inflation, and maximize employment. Sometimes it is an impossible mission.

The one issue that neither the Fed nor anyone else can fathom, let alone predict, is what people will think. People become unreasonably fearful or exuberant over conditions that may or may not have been planned or expected.

Consumer confidence trumps all else, logical or not. Human nature makes much of economic behavior a crap shoot. Greenspan notes that the Fed often gets it wrong.




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