New Posse Frowns upon Fed Actions

By Drahuschak, Gregory M. | Tribune-Review/Pittsburgh Tribune-Review, September 23, 2007 | Go to article overview

New Posse Frowns upon Fed Actions


Drahuschak, Gregory M., Tribune-Review/Pittsburgh Tribune-Review


Thirty years ago, bond traders and economists concerned that inflation was going to bring the economy to its knees were dubbed the bond vigilantes. This loosely connected group spoke and acted in ways to make certain that the Federal Reserve was aware of a budding inflation problem.

Last week's half-of-one-percent cut in the federal funds target rate and the discount rate brought out a new self-appointed posse to police the market.

Perversely, long term borrowing rates moved higher. In Treasury paper, the higher interest rates partly reflected a move away from the safety of Treasuries and into riskier investments. Part of the move to higher yields, however, was a clear expression from the new credit market watchdogs that inflation worries not only still exist but that the Fed's action might have made the situation worse.

The Philadelphia Federal Reserve Index report last week was considerably higher than a month ago and notably higher than expected. To the bond vigilantes, the report was solid evidence that the economy did not need lower interest rates.

Nonetheless, stocks posted one of their best weekly gains in a long time. From the close the day before the Fed meeting through the high on Friday, the Dow Jones Industrial Average gained 475 points, or 3.5 percent, for the best weekly gain since the middle of last year. The Dow and the Nasdaq Composite Index broke above some technical resistance points, which suggested the additional upside was likely. The market also rapidly returned to its pre-subprime loan problem favorites. The material, industrial and energy sectors of the S&P 500 led the advance.

That the market's exuberance weighed against the worries of the bond vigilantes begs the question of which view is correct.

The answer probably depends upon the time frame you consider, and even then, there is no definitive resolution to the debate.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

New Posse Frowns upon Fed Actions
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.