[quote=FlyerInHi]Learn what, CAr? The economy is now well above precious peak. Houses were built but we still have a shortage. It’s not like houses are sitting empty.
Overall, we are better off. Until we are worse off, there’s nothing to learn but to do things better.
It’s might be better to have booms and busts but overall higher growth over decades.[/quote]
Prices of assets are not “the economy.” When the Fed/govt manipulate markets the way they have over the past ~7 years, we no longer know how to determine the value of things.
Bubbles, booms, and busts are NOT healthy for the economy, no matter how desperately you try to paint it otherwise. As the market was crashing the last time (2008), there seemed to be a consensus agreement that the Fed had held rates too low for too long which resulted in the devastating credit/housing bubble and subsequent bursting of that bubble. So, what did they do to solve the problem? Break up the banks and force derivatives to be sold on public exchanges? No. Honestly evaluate counterparty risk where all of these derivatives are concerned? No. Reinstate Glass-Steagall so that commercial banks were separate from investment banks and insurance companies? No.
Instead, the Fed added fuel to the fire and dropped rates even lower for an even longer period of time, not to mention all of the other purchases of various assets at well above market price, etc. They ignored warnings (often by the same people who were warning about bubbles in the late 90s and mid-2000s) about the risk of blowing yet another credit/asset price bubble in stocks, real estate, bonds, commodities, etc.
The lesson was not learned. And now, they have not only caused the same kind of damage as we had during the past couple of bubbles, but I believe that we are in even more dangerous territory because of our exceedingly high debt levels and the already low/negative interest rates, which leaves them very little ammunition to fight the next fight.
Rising asset prices do not make a productive economy. If people never grasp this fact, we will be doomed to repeat these same mistakes over and over again.
[edited to add the following]:
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“Quantitative easing—the Federal Reserve‘s program of buying long term government and mortgage debt known as QE—is one of the more controversial policies practiced today. While there is evidence that it has successfully lowered interest rates, and therefore put more money in the pockets of creditworthy businesses and Americans, opponents of the policy have argued that the risks associated with the policy far outweigh the benefits”
