Legendary investor Michael Steinhardt, known to many as the father of the modern hedge fund era, offers his perspective on the Fed and advice for today’s tumultuous market.

Steinhardt spoke of the old days of the Federal Reserve, painting a picture of a respected body of market and economic professionals well-equipped to preside over the economy, no matter its state. But those were the old days, Steinhardt said. Since Alan Greenspan’s days as chairman, the Fed “has come off its historical pedestal” and is now just a rather “pedestrian” group of “guys who meet and figure out what to do.”

Without divulging specific investment advice, Steinhardt said he looks at current market conditions as falling into one of two categories. Either this is a traditional cyclical downturn, in which case there isn’t much to do, or things could be different because of the extraordinary amounts of “promiscuous lending” out there. Steinhardt didn’t say which he believes is the case. Everyone will have to decide for themselves which camp they fall in and then invest wisely, he said.

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Trader disclosure: On Jan 29, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (DIS), (YHOO), (EMC): Najarian Owns (BIIB), (C), (CSCO), (ETFC), (MS), (MSFT), (MCD), (XLF); Najarian Owns (WEN) Calls, (AAPL) Calls, (YHOO) Calls, (EBAY) Calls; Finerman Owns (GS); Finerman's Firm Owns (TSO), (VLO), (WMT), (YHOO), (SUN); Finerman's Firm Is Short (MDY), (IYR), (IJR), (SPY), (CLWR), Finerman's Firm Is Short (LEH) And Owns (LEH) Puts

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