Kashkari: Fed should not seek to deflate asset bubbles
Spotting bubbles is too difficult and costs of failure too great, Minneapolis Fed chief warns
The US Federal Reserve would – in most cases – be unwise to seek to prevent asset bubbles from forming, Neel Kashkari warns in a blog post published on May 17.
The president of the Federal Reserve Bank of Minneapolis says it is extremely difficult to tell when a bubble is forming, and similarly difficult to tell how significant its impact will be. The dotcom bubble in the early 2000s had little impact on the real economy, while the 2008 crisis clearly did.
Kashkari notes the Fed’s toolkit for
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