WSJ article - "Fed Debates New Role: Bubble Fighter"
secondrepublic
Posts: 2,619 ✭✭✭
I almost fell out of my chair laughing at the headline of this article. The Fed has been fostered various asset bubbles over the years with their interest rate policy, and now they want to fight bubbles.
Of course the article takes an obligatory swipe at gold: "With... gold prices busting records almost daily, the debate comes at a critical time."
This assumes there is a gold bubble.
The article goes on to conclude that "[o]f the two methods to prevent bubbles -- using regulations to protect the financial system from excess and changing monetary policy by raising interest rates -- Mr. Bernanke falls on the side of greater regulation, an idea he has advocated in the past."
Does this mean he intends to use regulations to burst bubbles. If he indeed thinks there is a bubble in gold prices, and intends to pop it, what kind of regulations could he have in mind? And would it ever work?
Link to Article.
Of course the article takes an obligatory swipe at gold: "With... gold prices busting records almost daily, the debate comes at a critical time."
This assumes there is a gold bubble.
The article goes on to conclude that "[o]f the two methods to prevent bubbles -- using regulations to protect the financial system from excess and changing monetary policy by raising interest rates -- Mr. Bernanke falls on the side of greater regulation, an idea he has advocated in the past."
Does this mean he intends to use regulations to burst bubbles. If he indeed thinks there is a bubble in gold prices, and intends to pop it, what kind of regulations could he have in mind? And would it ever work?
Link to Article.
"Men who had never shown any ability to make or increase fortunes for themselves abounded in brilliant plans for creating and increasing wealth for the country at large." Fiat Money Inflation in France, Andrew Dickson White (1912)
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