The Federal Reserve's Rate Hike: You Can't Have It Both Ways

The headline on Yahoo Business says it all: "World stocks hit by Fed's emergency loan rate hike." My paraphrase of that headline would go something like this: "Worldwide investors continue their policy of over-reacting and misinterpreting pretty much everything they see, hear and read."

For the last few months the CNBC and Fox talking heads have been agonizing about their belief that the Fed had no plan to ease out of its easy money stance. They pound their desks shouting that rates are artificially low and that hyper-inflation will bring the US to its knees. So you'd think the rate hike -- which really has no effect on the borrowing costs of consumers and businesses -- would be viewed positively. It's a clear sign that the Fed does have an exit plan and will fight any hint of inflation. And most importantly, it indicates that the economy is growing and financial conditions are improving.

So on second thought, my paraphrase of Yahoo's headline would read like this: "Grow Up!"