How To Beat The Fed At Its Own Game

Use cash, pay down debt and (sigh) expect a lot less from the stock market

Maybe now we'll take Alan Greenspan seriously. A perpetual pessimist, the Fed chief has for the past year been nipping at inflation he sees hidden in the economy's weedlike growth. Last week, though, he got serious, boosting interest rates a convincing half a percentage point, to 6.5% on the benchmark short-term federal funds target rate, and making it clear that more increases are to come.

If you're house hunting, carrying a lot of debt or underwater with recent stock-market losses, this is a painful shot of economic medicine. It means mortgage rates will be going higher, as will the rate on...

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