http://wolfstreet.com/2016/09/21/oecd-warns-fed-boj-ecb-of-asset-bubbles-risks-to-financial-stability-pinpoints-us-stocks-real-estate/
this is a good article,but I like this from the comments section,even better
this is a good article,but I like this from the comments section,even better
d,
The patient (we in the US) is responding to the drug (idiotic monetary policy) just as they expected and intended. The results you, I, and 99.9% of us want are just not the same thing they want. The Fed is protecting the ‘financial markets’, aka bubbles and their reputations and a few very rich people and the politicians who work for them.
Yes, they are protecting their reputations. They MUST publicly deny the existence of bubbles because if they admitted even one that they caused, then they would have to explain too many uncomfortable things that would crack the incompetence door much wider.
Even admitting 1 bubble would require them to provide explanations to:
1) If their theories are so good, why do they excel at bubbles in financial markets and asset prices and ignore benefits to the real economy
2) Why do they continually apply these theories if they have unintended consequences of such magnitude?
3) Why do they apply these theories over and over again if they don’t work?
4) How did “Going Bigger For Longer If It Does Not Work Today” become the mantra to ignore failure by defining it’s failure only if you admit your mistake and stop what you’ve been doing. Or, anything that’s not success is never failure … it’s always success, just not as much of a success as they wanted.
Finally, they can’t raise rates and change policy. The Fed is in a prisoner’s dilemma with the ECB, BOJ, BOE, and most minor central banks. The only reason monetary policy can crush interest rates so well is that they all are doing it in a coordinated manner. If the Fed broke ranks and tried to normalize rates, they would ruin the schemes the other two employ … The ECB monetizing bad euro debt to keep the plate spinning a little longer and the Japanese doing god knows what. The Fed doesn’t want to be the one that explodes the sovereign debt bubble. How would they explain that?
It’s not complicated, but there is a lot of BS that surrounds the bad policy they implement.
The patient (we in the US) is responding to the drug (idiotic monetary policy) just as they expected and intended. The results you, I, and 99.9% of us want are just not the same thing they want. The Fed is protecting the ‘financial markets’, aka bubbles and their reputations and a few very rich people and the politicians who work for them.
Yes, they are protecting their reputations. They MUST publicly deny the existence of bubbles because if they admitted even one that they caused, then they would have to explain too many uncomfortable things that would crack the incompetence door much wider.
Even admitting 1 bubble would require them to provide explanations to:
1) If their theories are so good, why do they excel at bubbles in financial markets and asset prices and ignore benefits to the real economy
2) Why do they continually apply these theories if they have unintended consequences of such magnitude?
3) Why do they apply these theories over and over again if they don’t work?
4) How did “Going Bigger For Longer If It Does Not Work Today” become the mantra to ignore failure by defining it’s failure only if you admit your mistake and stop what you’ve been doing. Or, anything that’s not success is never failure … it’s always success, just not as much of a success as they wanted.
Finally, they can’t raise rates and change policy. The Fed is in a prisoner’s dilemma with the ECB, BOJ, BOE, and most minor central banks. The only reason monetary policy can crush interest rates so well is that they all are doing it in a coordinated manner. If the Fed broke ranks and tried to normalize rates, they would ruin the schemes the other two employ … The ECB monetizing bad euro debt to keep the plate spinning a little longer and the Japanese doing god knows what. The Fed doesn’t want to be the one that explodes the sovereign debt bubble. How would they explain that?
It’s not complicated, but there is a lot of BS that surrounds the bad policy they implement.