Bernanke: Fed May Need to Burst Asset Bubbles to Steady Economy

[bobbyw24]

Federal Reserve Chairman Ben Bernanke said on Tuesday that central banks may need to resort to monetary policy to combat asset bubbles, although regulation should be a first line of defense.

"The possibility that monetary policy could be used directly to support financial stability goals, at least on the margin, should not be ruled out," he said at a conference at the Boston Federal Reserve Bank.

Bernanke did not directly discuss the outlook for the U.S. economy or monetary policy in his speech, which offered thoughts about how central banking might shift in the wake of the financial crisis.
___________

Read more: http://www.moneynews.com/Headline/Bernanke-Central-Banks-Bubbles/2011/10/18/id/414889

 

[noxagol]

In other words, asset bubbles are making them all look bad by revealing the inflation.

 

[pmbug]

The want to inflate the deflating asset bubble in real estate while deflating the asset bubble in other commodities which reveal the true nature of their first efforts. They are picking winners and losers. Caveat emptor.

 

[Chester Copperpot]

i know how they could do that.. but fuck it... i want all these bubbles to keep deflating.

 

[jason43]

How many fingers are left to stick in the dam exactly?

 

[Seraphim]

Well Bernanke, let's start with the mother of all bubbles: US Treasuries.

Fat chance.

 

[Zippyjuan]

That would certainly be a change of direction for the Fed if they did go that route. That would mean steps to raise the value of the dollar- they are currently trying to keep it low to attempt to help the economy by discouraging imports and encouraging exports (the consequences of a low dollar). The most likely way to do that would be to start raising the interest rates it charges to banks that borrow from the Fed or by starting to sell some of their Treasury holdings.

 

[LibForestPaul]

That would certainly be a change of direction for the Fed if they did go that route. That would mean steps to raise the value of the dollar- they are currently trying to keep it low to attempt to help the economy by discouraging imports and encouraging exports (the consequences of a low dollar). The most likely way to do that would be to start raising the interest rates it charges to banks that borrow from the Fed or by starting to sell some of their Treasury holdings.

Quaint - "helping" the "economy". America's, mine, yours, Europe's, International Banking Cartels bottom line, which economy oh dear. And what do they consider helping.

 

[Zippyjuan]

Note I said "trying". They haven't exactly been that successful. Certainly not with the overall US economy.

 

[hugolp]

Note I said "trying". They haven't exactly been that successful. Certainly not with the overall US economy.

But you are missing the point. They are not trying. They are just saying they are trying as an excuse to keep bailing out banks and hedge funds.