They are happy to let
asset bubbles develop, because that is not what they are employed to handle.
One person who pointed out the dangerous
asset bubble developing in 2005 was economist Robert Shiller, whose composite Case - Shiller index, created in the 1990s, studies real estate prices nationally and in key urban areas.
Not exact matches
Many Chinese commentators think the Plaza Accord of 1985, reached in New York by finance ministers from five
developed countries, did not solve many problems in the world and was partly to blame for the Japanese
asset bubble and subsequent slowdown.
Soros has a comment that applies here as well: «when interest rates are low we have conditions for
asset bubbles to
develop.
Mostly he says unless the U.S. is a
developing country without domestic access to capital (obviously not), out trade deficit causes unemployment and
asset bubbles.
But along the way, a
bubble has
developed, with companies pursuing hundreds of new studies and grabbing pipeline
assets in a rush to multiply checkpoint drugs and compete with therapies already on the market.
If were going to have fiat money, do it in such a way that
bubbles do not
develop, which means not caring about the effects of policy on risky
asset markets.
When an
asset class (e.g., stocks, bonds, commodities, real estate, collectibles, etc.) skyrockets in price — when it surges higher without sufficient economic reason — a
bubble develops.