Reason Foundation - Experts (Reason Foundation) Feds Should
Allow the Market to Work Freely <p>As Congress comes back from
recess, the move towards increasing financial regulations will
pick back up in earnest. From regulating hedge funds to widening
the oversight roles of the Federal Reserve and Securities and
Exchange Commission, we&rsquo;re seeing a Washington power grab
like never before. Treasury Secretary Tim Geithner has asked
Congress to grant the government more authority, but before they
do, lawmakers should take a look at history to see the
consequences of past federal financial activism.</p> <p>Before
1979, the Federal Reserve (Fed) used &ldquo;interest rate
targeting&rdquo; as monetary policy to stimulate economic
growth. But to manipulate interest rates the Fed would expand
and contract the money supply in reaction to the market cycle.
But because of the lag between this policy&rsquo;s
implementation and when it impacts the economy, the long-term
ramifications were nearly impossible to predict.