Ken, you got to also consider, what would have happened if in 1997 and then in 1998 (the Asian crisis, followed by the Russian melt down) and then in late 2000, if there would have been a year 2000 problem, AG did not provide the liquidity. Each of these events could have resulted in a freeze of the financial systems worldwide, with much greater consequences than the easy money. The error, IMTO, was not starting a very slow (.25) points increase in rates once it was clear (during the last quarter last year) that the economy is growing at 8% plus and will continue at the 4% plus for most of this year. That would have, IMTO, instilled confidence in the business community that indeed the feds think (and thus "it must be true" <g>) that the storm is over By now we should have been at an overnight rate of between 1.75% to 2%, giving retired people an opportunity to earn some money in safe government instruments, instead of being forced to glean risky returns in the equity market. Furthermore, that would position the feds early in 2005 (with overnight rates by then at a still very modest $2.5 to 3%) with some ammunition to counter the next recession. Right now, all the bullets are spent (monetary and fiscal) and a recession in 2005, might end up being stagflationary, the worst environment for the markets and the economy. I think AG did the right things in the 1997/1999 period, and even taking the bowl away in 2000 was fine (I think that the government should have distributed the budget surplus to all tax payers as I suggested at the time during late 2000 and early 2001, since surpluses invariably cause recessions if they exceed 1% of GDP, I am sure you have the sources to verify that very little notice fact).
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