INSIDE THE MONEY MARKET

A New York banker and former Treasury Department analyst, Lindow explains how the money market operates (just like a farmers' market -- very Smithian) and differs from the stock and bond markets, defines the multiplicity of pressures (psychological, political, financial) which affect it, and emphasizes new market instruments developed to meet the changing demands of both borrowers and lenders. Lindow has the vault-tight mind of a cool portfolio man and writes in a style befitting that appellation -- dully. For instance the detailed analysis of one of the newer and most successful monetary devices, the negotiable certificate of deposit (CD), is unorthodox enough to stimulate a clubby discussion with, say, a McChesney Martin but the average investor (at whom this is aimed) will long for The Wall Street Journal or American Banker. Reviewing past and present Federal Reserve policies, Lindow generally faults the Fed for not always exercising its economic regulatory powers vigorously enough -- a situation which has led to some short-term grief on more than one occasion. In the final section, he trades security for a turban, peering into the money market's future; speculations include the predictions that CDs will probably grow faster than other market instruments (despite the beating they took in the late '60's) and that the Fed will begin paying more attention to the linkage between the money and other markets and tailor its policies accordingly. Most of the prognostication is a shell game played with heads of lettuce (after all, it's simply a big farmers' market); the rest is strictly for big dealers.