Hussman Commentary: July 3, 2006 - Fedwatching - Just Say No

Hussman Funds - Weekly Market Comment: July 3, 2006 - Fedwatching - Just Say No: "The financial markets continue to have what I view as an unhealthy and pointless obsession with the Federal Reserve. Unhealthy because it detracts attention from the significant risks posed to the stock market from rich valuations, and to the economy from an enormous current account deficit, weakening housing, and flattening employment conditions. Pointless because the monetary policy is now, and always has been, the gopher of fiscal policy. The Fed can do nothing but decide whether government liabilities held by the public take the form of money (currency and reserves) or Treasury securities. It has no power to determine the total quantity of those liabilities (Congress does that). Whatever influence the Fed ever did have was largely removed in the early 1990's (see Why the Fed is Irrelevant)."