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Bail Me Out!

I’m no monetary policy expert, but Clive Crook’s point that it seems a bit misguided for the Fed to respond so dramatically to stock market news certainly looks sound to me. After all, interest-rate decisions and forecasts about interest-rate decisions are one of the determinants of stock market prices. Insofar as people get the idea that the Fed will act directly to avoid stock market price declines, that seems like something that will feed back into stock purchasing decisions in a potentially destructive way.

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