{"id":24098,"date":"2017-05-31T20:10:05","date_gmt":"2017-06-01T01:10:05","guid":{"rendered":"http:\/\/olduvai.ca\/?p=24098"},"modified":"2017-05-31T20:10:05","modified_gmt":"2017-06-01T01:10:05","slug":"dear-fed-its-not-really-hard-to-spot-bubbles","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=24098","title":{"rendered":"Dear Fed, It\u2019s Not \u201cReally Hard to Spot Bubbles\u201d"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2017\/05\/30\/u-s-house-price-crash-predictions-federal-reserve-cannot-see-bubbles\/\">Dear Fed, It\u2019s Not \u201cReally Hard to Spot Bubbles\u201d<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>Here are some visual aids to help the Fed spot the housing bubble.<\/strong><\/p>\n<p>Minneapolis Fed President Neel Kashkari was the latest Fed official to claim in an <a href=\"https:\/\/www.minneapolisfed.org\/news-and-events\/messages\/monetary-policy-and-bubbles\">essay<\/a> \u2013 thus following in the time-honored footsteps of former Fed Chair Ben Bernanke \u2013 that \u201cspotting bubbles is hard,\u201d that the Fed cannot see them, and that if it could see them, it shouldn\u2019t do anything to stop them because it had only \u201climited policy tools,\u201d and because \u201cthe costs of making policy mistakes can be very high.\u201d<\/p>\n<p>But it\u2019s OK to use these \u201climited policy tools\u201d to inflate the greatest bubbles the world has ever seen and then preside over the damage they cause to the real economy before they even implode.<\/p>\n<p>Neither Kashkari nor anyone else working at the Treasury Department in 2006 \u2013 when they were tasked by Secretary of the Treasury Hank Paulson to look for signs of trouble because they were \u201cdue for some form of crisis,\u201d as he writes \u2013 could see any bubbles, not even the housing bubble although it was already beginning to deflate.<\/p>\n<p>\u201cIt is really hard to spot bubbles with any confidence before they burst,\u201d Kashkari writes, specifically naming stock prices and house prices. \u201cEveryone can recognize a bubble after it bursts, and then many people convince themselves that they saw it on the way up.\u201d<\/p>\n<p>So here are some visual aids I put together for Kashkari and other Fed governors. It will help them \u201cspot\u201d the beautiful housing bubbles in the US \u2013 because bubbles really aren\u2019t hard to recognize before they burst, if you <em>want to<\/em> recognize them.<\/p>\n<p>What\u2019s hard to predict accurately is <em>when<\/em>\u00a0they\u2019ll burst.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Dear Fed, It\u2019s Not \u201cReally Hard to Spot Bubbles\u201d Here are some visual aids to help the Fed spot the housing bubble. Minneapolis Fed President Neel Kashkari was the latest Fed official to claim in an essay \u2013 thus following in the time-honored footsteps of former Fed Chair Ben Bernanke \u2013 that \u201cspotting bubbles is [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[303,406,15371,3650,4254,4255],"class_list":["post-24098","post","type-post","status-publish","format-standard","hentry","category-economics","tag-fed","tag-housing-bubble","tag-neel-kashkari","tag-us-federal-reserve","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24098","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24098"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24098\/revisions"}],"predecessor-version":[{"id":24099,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/24098\/revisions\/24099"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24098"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24098"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24098"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}