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To: Red in Blue PA

I’ve noticed that the markets tend to fluctuate.


46 posted on 08/23/2015 7:38:43 PM PDT by cydcharisse (`)
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To: cydcharisse

Unfortunately, for about the last decade the FED has been artificially preventing major fluctuations in the stock indices, based on a theory that boils down to: if we can prevent a stock market crash from happening, there will never be a major economic downturn.

You see the problem with this theory.

In any event, the FED can do something in the market that no one else can do, which is to act invisibly. Using several billion dollars of invisible money they can buy and sell, *not* to support the whole market, but just to stabilize the indices on which the market operates.

However, while this neat trick has worked for a while, it has little control over foreign indices, and if a bad enough problem happens, it might actually magnify it, causing a much worse catastrophe than had they let the market alone.


79 posted on 08/24/2015 10:41:17 AM PDT by yefragetuwrabrumuy ("Don't compare me to the almighty, compare me to the alternative." -Obama, 09-24-11)
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