Do y'all know anything about this idea that the Fed has no control over interest rates as supposedly evidenced by the fact that the Discount Rate follows the T-Bill rate?

http://marketoracle.co.uk/article7081.html

I know this has to be a fallacy of some sort, but I can't figure out what the fallacy is.

Obviously, if the Fed increases money supply, or lowers the funds rate, it will put downward pressure on interest rates. This is basic supply and demand. Those who claim otherweise must be committing some fallacy or other.

One thing I noticed, is that the article assumes that the only way the Fed lowers interest rates, is by lowering the discount rate. My understanding, is that the Fed also lowers interest rates by purchasing T-Bills (a.k.a. expanding the money supply/lowering the Fed Funds rate).

Does this have something to do with the fact that the T-Bill rate appears to anticipate the discount rate?

Wouldn't we also need to look at a chart that compares the T-Bill rate to the federal funds rate (not just the discount rate).

QUESTION: When people claim that the Fed manipulates interest rates, are they referring to the "prime rate" (the rate at which banks loan out money to us normal people), or are they referring to something else?

Here's a chart showing that the Fed Fund's rate is a "mirror image" of the prime rate:

http://www.bankrate.com/brm/news/fed/fedchart.asp

I believe this is an important piece of the puzzle.

I think I solved the mystery:

Prechter is pretending that the Fed (when lowering it's funds rate) is taking it's cues from the bond market. This is how he argues that the Fed is simply "following the market", and has no real control over interest rates.

In reality, the bond market is ANTICIPATING what the Fed is likely to do. There are experts who's job it is to do this.