Perhaps the most important event following the market "meltdown" two Mondays ago was the dramatic infusion of hard cash into the U.S. financial system by the Federal Reserve Board.

Anyone who ever had doubts about the ability of the new chairman, Alan Greenspan, to respond in the right way to crisis has his answer. The Fed's prompt turn toward monetary ease has lowered interest rates and softened the blow of the market crash.

The Fed's action represents the single biggest difference between the crisis of 1987 and the Great Crash of 1929. Incredible as it may now seem, the Fed in 1929 responded to the October stock market collapse by tightening money, which helped push the nation into the Great Depression.

This is not to say that a recession has been avoided: The stock market collapse has shaken prospects for economic growth here and abroad. The extent of any economic readjustment will depend on the kind and quality of political leadership that follows the Fed's quick fix.

But it is a reasonable conclusion that without the Fed's immediate response that Tuesday morning after the "meltdown," there might have been another 500-point drop in the market -- with consequences so great that they are hard to imagine. And the Fed's continued easy money hand has been the main factor in the market's partial recovery toward the end of last week.

New York Stock Exchange Chairman John J. Phelan Jr. (who coined the meltdown phrase for that scary Black Monday market), was asked by The New York Times what would have happened had there been another 500-point drop in the Dow Jones index.

"I'd become a drinking man," he quipped. "The big fear was last Tuesday {Oct. 20}. If we had two days back-to-back of 500 points down, we would have run an enormous risk of problems to the system. They could have appeared anywhere... . The Fed was there, though. They were good. They urged people to provide liquidity... . Between the Fed and the Treasury, they couldn't have been better."

Greenspan's actions are especially gutsy in another context: Neither he nor any other official is likely to put it this way, but by pumping liquidity into the market, he abandoned former Fed chairman Paul A. Volcker's futile strategy of boosting interest rates to shore up the value of the dollar.

Volcker, fearing the inflationary impact of a lower dollar, earlier this year helped persuade Treasury Secretary James A. Baker III to reverse a yearlong effort to push the dollar down so as to cut the trade deficit. Baker accepted the idea that a further dollar decline at that time would be counterproductive, and possibly push Japan and West Germany into recession.

So at the Louvre Palace last February, Baker acceded to the Japanese/German demand for "stability" of the dollar, in exchange for their promise to stimulate economic growth. But the price Baker and Volcker paid was higher interest rates at home -- one of the basic reasons behind the stock market collapse on Black Monday. And the Germans never came through on their promise to expand, and very recently pushed their high real interest rates even higher.

The Volcker-Baker policy's first priority was stability for the dollar, not stability of the economy. So was Greenspan's first move -- a half-point boost in the discount rate that in retrospect looks like the wrong tactic. (It would not be surprising if the next move on the discount rate were down.)

Greenspan changed the Fed's dollar-defense policy on Oct. 20 by easing money and interest rates. It was an implicit acknowledgment that the dollar must fall some more -- gently, if possible -- and that stability for the economy in the wake of the market decline should get the top priority. By implication, it meant that the Reagan administration would no longer so rigidly adhere to the original exchange rates set in the Louvre Accord, and instead would look for "stability" of the dollar at a lower level.

But as everyone in financial markets knows, the Fed can't keep printing money forever. Too much of a money-creating binge could touch off a massive collapse of the dollar and necessitate a return to the old Volcker-Baker policy of trying to prop up the dollar level with higher interest rates.

"That's the last thing anyone wants to see," said New York financial expert Henry Kaufman.

But while no one in authority at the Fed would be irresponsible enough to talk about a time limit on the current easy money policy, it's obvious that the only safe assumption is that there is such a limit: The Fed can't keep up its present pace without two offsetting policy actions.

One, of course, must come from the fiscal side: A sizable budget reduction would enhance faith in the creditworthiness of the United States, help puncture the consumption boom and tend to encourage foreigners to keep their money invested here.

The second step has to come from the other nations in the Group of Seven -- but notably from West Germany. To the extent that Germany reverses its policy and lowers interest rates, the decline of the dollar will be braked, and the Louvre Accord can be reaffirmed -- probably with lower, wider, more flexible target ranges.

In that case, Greenspan's Fed would be able to continue its policy of pumping liquidity into the markets with less fear of a dollar collapse. And the other countries -- again, notably West Germany -- will be able, through their own expanding economies, to take up some of the global slack generated as the United States cuts spending at home and abroad.

Happily, both the West German and Japanese governments now seem to have come around to the view that while they don't like to see their currencies move up even more against the dollar -- cutting their export growth potential -- such a development is preferable to a new round of recession-inducing higher global interest rates that would be necessary to keep the dollar at the Louvre levels. So, the name of the new international exchange rate game is to tolerate a fairly gentle further fall of the dollar and accept whatever moderate new inflationary pressure arises.