I give up, whom or what is the Fed going after? Is it inflation? Well, are we sure the threat is real? The PPI was down 0.3% last month; excluding food and energy, the gain was only 0.1%. Or is the Fed targeting spendthrift stockholders? Well, "the market"--the 60-or-so stocks that have accounted for just about all the gains in recent years--is down. The Fed's actions also managed to squelch the market rally's attempts at broadening. So why isn't Greenspan happy?

We've gotten so many confusing signals from the Fed. I'm convinced that they are totally confused by the numbers, and just can't bring themselves to abandon old ways of thinking about the economy. Thus the endless stream of contradictory statements. The bond and stock markets are terrified that the Fed will go too far with interest rate increases and zap the economy. The markets need to believe that they're not out to control the stock market before this awful volatility will end.