(DOWNLOAD) "Preventing Bubbles: Regulation Versus Monetary Policy." by The Cato Journal ~ Book PDF Kindle ePub Free
eBook details
- Title: Preventing Bubbles: Regulation Versus Monetary Policy.
- Author : The Cato Journal
- Release Date : January 22, 2011
- Genre: Politics & Current Events,Books,
- Pages : * pages
- Size : 240 KB
Description
Over the years, there has been a lot to consider in the Federal Reserve's choices of monetary policy and their relationship to bubbles. My conclusion is that mistaken U.S. monetary policy, usually related to the Fed's indifference to the value of the dollar, has repeatedly caused harmful asset bubbles in the United States and abroad. Policy is again at risk with the Fed's imposition of near-zero interest rates and its decision to conduct large-scale asset purchases (termed "quantitative easing"). Regulatory policy has often been ineffective at identifying or addressing asset bubbles, especially those caused by Fed policy. The solution is a parallel track to improve monetary policy so that it provides a more stable dollar and fewer asset bubbles; and to strengthen regulatory policy so that it provides a more reliable base for growth-creating free markets. In an October 1999 speech at the Cato Institute's Annual Monetary Conference, I criticized U.S. monetary policy for strengthening the dollar, driving gold and commodity prices down, and creating unsustainable deflationary pressures in developing countries. While the United States felt satisfied with the tech boom and low unemployment, the inflow of hot money driven by the strong and strengthening dollar was creating an artificial global capital allocation that ended in a bust and recession. I think the Fed should have sought a strong and stable dollar in the late 1990s, not a strengthening dollar, and encouraged stronger regulatory scrutiny in those financial markets where it perceived irrational exuberance. This approach would have resulted in faster, more balanced global growth.
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