Let me give credit where it is due. While I was on vacation last week the Financial Times of London quoted a Fed official who didn't want to be named as saying that one of the extraordinary measures considered in January was "buying U.S. equities." The FT quoted the official as saying the Fed could "theoretically buy anything to pump money into the system" including "state and local debt, real estate and gold mines - any asset."

I had a conversation with a very worried Fed official back on Sept. 17, the day the stock markets reopened in the U.S. following the Trade Center attacks. He was bothered by the market's apparent lack of interest in the Fed's rate cut that morning.

You'd think that the Fed providing a safety net for the market would be extremely good news for investors. In fact, it would be logical to assume that big losses in stocks would be impossible if the Fed was aggressive in the market.