Are we in a tighten-away-we-don't-care mode? Let's think about it.

During the past 10 years, Americans have embraced stock and stock mutual funds as never before. And don't give me any of this 1920s garbage. While the U.S. is a wealthier country than most, the average person did not own

Harvester

the way the average person owns

Yahoo!

(YHOO)

. Stocks were a fascination among 5% of the country then. Now stocks are the mainstay of many people's wealth.

The people who are buying stocks are not doing so with an eye on the

fed funds rate

, as much as

CNBC

or anybody else tries to make them out to be. The people aren't looking at the size of

Alan Greenspan's

briefcase. They are looking at the size of their portfolios. And they don't see them shrinking.

Join the discussion on

TSC

Message Boards. In fact, as our 230,000-odd members would tell you, the contributions to the stock market would be made regardless of the fed funds rate, and it is only Old Guard analysis that relates the two. The interest in the stock market would not diminish at a 7% fed funds rate. That simply isn't competitive to most stocks that the public owns.

But, you might ask, how about all of those mutual funds? Don't they know better? Don't they know that the

Fed

is anxious to cool things off, so maybe they shouldn't buy stocks?

Nah, their charters all talk about the requirement to invest. Many have no choice.

Surely, you might think, some of the larger, better managers will show some discretion and back off the market during the tightening process.

Nope. In fact, I know more managers who have lost their jobs for not investing than for investing badly. In mutual fund land, the cardinal sin is to sit out the bull, not to avoid the bear. You don't get fired for losing money. You get fired for not taking chances.

But won't some companies get hurt by the high inventory costs associated with a sizable increase in short-term rates? Sure, but it is all Old Economy anyway, companies that have inventory cycle costs, not

Akamai

(AKAM) - Get Report

or

Xilinx

(XLNX) - Get Report

.

Yesterday it got worse for the Fed, if the Fed were trying to send a statement to the markets. The Fed raised short-term rates, and the rates that are competitive with the stock market, the long-term rates (because people invest for the long term) actually went down yesterday! The Fed just made it cheaper to buy an inflated home with the price of inflated equities. Fuel on, big guys!

Yep, I think we and the Fed are beginning to discover that these quarter-point raises to some obscure rate that pays you more to keep money in the bank and not invest it in the market is nowhere near where it has to be to discourage the public.

The funny thing is that when Sen.

Chuck Schumer

asked the commonsensical thing about raising margin rates to Greenspan, the Fed chair didn't take the bait. He would rather slow the real economy with quarter-point tightenings from now to whenever, than address what is causing the inflation that he so fears: the indiscriminate buying, some of it leveraged, in the stock market. While those who work at

International Paper

(IP) - Get Report

and

Bethlehem Steel

(BS)

can't be happy, most of the New Economy could care less. The Fed is a sideshow in the world of rapid growth, and these quarter-point tightenings point out the irrelevancy of Fed policy toward the stock market, not the power of it.

I wonder sometimes when we look back, if the following story could be written: "During a period in the late 20th century and early 21st, the Federal Reserve championed stock ownership by doing nothing to quell the greatest bull market in history."

My bearish friends in the press would then write: "which, of course, led to the greatest crash in history and a recreation of the Japanese decline."

Whereas I'd write, "The advance lasted far longer than anyone expected, and while occasional stocks were taken to extreme overvaluation and then extreme undervaluation, it all worked out pretty good in the end for those who had a predilection to own -- and not sell -- stocks."

Bad copy -- good ending.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Yahoo! and Xilinx. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.