Good question!
Its not. They are, in essence, rigging the free market capitalist system and affecting changes in it.
However, in a rational sence, they are controlling the Economy so as to smooth out the Highs and Lows (the Amplitude of the Waves). 
Posted on 05/10/2006 12:06:52 PM PDT by Moonman62
WASHINGTON (AP) -- The Federal Reserve on Wednesday raised a key interest rate to the highest level in more than five years but signaled that it may pause to assess the impact of its string of rate hikes.
The Fed boosted its target for the federal funds rate to 5 percent. The funds rate, the interest that banks charge each other, stood at a 46-year low of 1 percent when the central bank began raising rates in June 2004 to keep inflation under control.
In its statement announcing the decision, Fed policy-makers indicated they may take at least a brief pause in pushing rates up further. It said the "extent and timing" of further rate increases would depend on future economic data.
The Fed's rate hikes have raised the borrowing costs for millions of Americans on everything from adjustable rate home mortgages to auto loans. Commercial banks were expected to quickly match the Fed action by boosting the prime lending rate to a five-year high of 8 percent.
Fed Chairman Ben Bernanke had raised expectations that the central bank was getting ready to pause when he said in congressional testimony on April 27 that the central bank might take a break for "one or more meetings."
Bernanke, who succeeded the legendary Alan Greenspan as Fed chairman on Feb. 1, said a pause would give the central bank time to assess the impact that its long string of rate increases was having on the economy.
In the statement announcing Wednesday's rate increase, the Fed said that some further rate hikes "may yet be needed." That marked a slight modification from the March statement when it stated that further rate increases "may be needed."
It added another phrase in the latest statement saying that "the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information."
Bernanke had created confusion about the exact meaning of his congressional remarks when he was quoted by CNBC as saying that financial markets had misread his congressional testimony.
That comment came after bond prices, always sensitive to inflation worries, had fallen on fears that Bernanke would not be as tough as Greenspan had been in fighting inflation.
Private economists are split over whether Wednesday's rate hike will be the last for awhile or whether the Fed may pause for one or two meetings and then raise rates another one or two times to make sure that a recent jump in energy prices does not spill over into more widespread inflation problems.
In assessing the current state of the economy, the Fed's brief statement tracked the comments Bernanke had made to the Joint Economic Committee.
The statement said that while economic growth had been "quite strong so far this year," the central bank still expected growth would moderate to a more sustainable pace, "partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices."
The overall economy grew at a sizzling pace of 4.8 percent in the first three months of this year, the fastest spurt for the gross domestic product in 2 1/2 years. But private forecasters believe growth has slowed in the current quarter, reflecting in part rising mortgage rates, which have dampened home sales.
On inflation, the Fed said that the surge in energy prices so far had had "only a modest effect on core inflation" with inflation expectations remaining contained.
The statement noted a unanimous vote for the quarter-point increase in the funds rate.
Hope they keep an eye on oil prices while they are raising the interest rate.
I have 2 words for them, F***ing idiots! How is this suppose to help anything.
So here's a question for the armchair economists among us: "The Fed's rate hikes have raised the borrowing costs for millions of Americans on everything from adjustable rate home mortgages to auto loans." So the government determines this crucial aspect of the marketplace. In what sense is that free market capitolism at work?
It's all smoke and mirrors. We have not been a free market since well 1900.
Housing - stagnant. Health care - stagnant. Education - stagnant. Insurance - stagnant. Taxes - stagnant.
Yeah. I understand what you mean.
Well, that statement gives me warm fuzzies. "We're not sure what impact the rate hikes are having so we'll stop for awhile and see.".
Guess that inflation rate announced by US Treasury in April in connection with the I bonds is greater than the 1% that Treasury adjusted for.
Rate hikes are a way to keep our US dollar high with respect to other currencies. After other currencies get higher in comparison to our dollar, you can bet on another US rate rise in reaction.
Our fattest political contributors will continue to be able to buy containers of imports for less and get more for less while vacationing in foreign countries. That way, they will be able to keep us up to date on European social politics and feel better about further disrespecting US social conservatives and letting Hillary get into office in 2008. Regardless of which party gets executive office, their daughters will remain in power here.
...see how it all works out?
This is starting to have that Seventies Flashback feeling, and I don't mean disco.
Free market capitalism requires sound monetary policy and a sound currency, the latter of which implies low inflation. Fre market capitalism does not connote wild anarchy in business dealings.
And despite the claims that we haven't had a free market for 100 years, that's nonsense. If anyone wants to go out and start a business, who's stopping them? The entire job growth in this latest expansion has come from small business...households forming startups. That is free market.
If I were a member of the FOMC, I would raise interest rates up to 20-25%. I think saving the US dollar is more important than "employment".
The Fed is more concerned with what they think inflation will be in the near future.
There has been some evidence that real wages are starting to rise, an unemployment is in danger of getting too low.
Good question!
Its not. They are, in essence, rigging the free market capitalist system and affecting changes in it.
However, in a rational sence, they are controlling the Economy so as to smooth out the Highs and Lows (the Amplitude of the Waves).
Just recently in my area, a big, urban developer tried to get one of his radical environmentalist concubines/employees into office as a commissioner in a rural area outside of his city, so that she could run interference against small developments. Similar tactics of the past in the lumber industry led to the interesting situation we have in that market, too.
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