Re: Re: U.S. Monetary Policy

[Doug Henwood]

Ellen Frank wrote:

>Hey Doug - You know, I just don't beleive this stuff about
>the stock market.  I mean, if the Fed wanted to burst the
>stock bubble, why not raise margin requirements?  Why
>pussy-foot around with 1/4 point rate increases that
>the market keeps discounting in advance?  There's not
>even good evidence or precedent for short-term rate
>increases correlating with lower stock prices.  I think
>the Fed is using whatever lame excuse it can think up to
>raise interest rates, for pure distributive reasons.

Maybe so, but 1) any sane central banker would have to be worried 
about the stock market, and 2) why would Alan & Co. be leaking this 
to Fortune, rather than USA Today? I could add 3) the distributive 
reason - excessive wage increases from the Kalecki full-employment 
effect - is compatible with the stock market reason; nothing like 
higher rates to take the heat out of both wage and asset inflation.

Doug