Fed Reserve Speech Full of Hot Air?

In His speech earlier this week, US Federal Reserve Chairman, Ben Bernanke highlighted that central bankers remain as confused as ever about the best approach to responding to the emergence of asset price bubbles.

At the time the US authorities were paranoid about the possibility that the US might experience deflation and something akin to the decade of economic winter the Japanese experienced in the 1990s. The prolonged period of zero or negative real interest rates, and massive fiscal deficits, are obvious macro factors in the creation of the bubble.

In the speech, to the annual meeting of the American Economic Association, the Federal Reserve Board chairman made a detailed response to the widespread criticism of the role of the Fed in the lengthy build up to the bubble in the US housing market that played such a major role in the global financial crisis :: Read the full article »»»»