Kashkari on monetary policy and economic bubbles
– Fed must remain alert for signs of bubbles
– Should force banks to raise a lot more capital
– Extremely hard to spot asset bubbles forming
I agree with him on bubbles. You can’t use rates to fight them. The best the Fed can do is issues warnings and try to shine a light on assets that are unsustainable. Beyond that, you need to let markets do their thing. If people get hurt later, at least you warned them.
Fed’s Kashkari: Tackling asset bubbles with higher rates is a last resort
ByAdam Button
May 17, 2017