I t's hard to find any expert who doesn't think the Federal Reserve will raise interest rates slightly when it meets next week. It is harder still to find agreement on why the Fed should make that move. Besides, the nation's central bankers usually ratchet up the cost of borrowing to control or even to try to head off inflation.
Nobody knows the mixture of mania and solid performance that underlies the stock market.
But there's reason to be concerned about whether the boom will continue when people start to borrow heavily to buy shares in the expectation that the market will keep rising indefinitely, then using their stock gains to underwrite more borrowing and buying, which in turn drives up the market. For many years it raised and lowered margin requirements periodically, much as it changes rates charged on loans among banks. But it hasn't used the power to adjust margin requirements since 1974. Since then individuals have been able to set up margin accounts with brokers and borrow up to half of the value of stocks they buy. A chorus of economic experts has been second guessing the Fed's plan to raise the interest rate.