Ronald Reagan once said “the scariest words in the English language are ‘we’re from the government and we’re here to help you.’”

I am a great fan of Adam Smith, an economist who died several centuries ago.

His concept of how the market corrects excesses still works today. To simplify his invisible hand of the market, if there is too much of something the price and/or production of that item will decline.

If there is too little of something, price and/or production will increase. In a perfect world, this corrective process of the market would always be relied on and intervention by the government would not occur or be minimal.

The purpose of the Federal Reserve is to make sure that the banking system and economy are operating properly, efficiently, and are on solid ground.

The Federal Reserve does intervene when it deems necessary, sometimes daily, by injecting or withdrawing liquidity from the system through open market operations or over longer stretches by changing interest rates to accelerate or slow down the economy.

Recently, the Federal Reserve stepped in to help in the bailout and subsequent merger of Bear Sterns.

This move, which was almost unprecedented, has raised a number of questions. Primarily, was taxpayer money used to help Bear Sterns shareholders? The answer to that is a definite no.

One year ago, the price of Bear Sterns was in the $170 per share range.