Martin Feldstein is one of the most prominent economist in the country. He was actually Greenspan’s first pick for Fed Chairman and judging from the comments in his speech I wonder why??
“Even with the best of policies to increase liquidity, future aggregate demand is likely to be depressed by weak housing construction, depressed consumer spending and the impaired credit markets. Lower interest rates now would help by stimulating the demand for housing, autos and other consumer durables, by encouraging a more competitive dollar to stimulate increased net exports, by raising share prices that increased both business investment and consumer spending, and by freeing up spendable cash for homeowners with adjustable rate mortgages.”
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“But what if the outcome in the absence of a substantial rate cut would be more benign and yet the Fed nevertheless cuts the federal funds rate? The result would be a stronger economy with higher inflation than the Fed desires, an unwelcome outcome but the lesser of two evils. If that happens, the Fed would have to engineer a longer period of slower growth to bring the inflation rate back to its desired level. How well it succeeds in doing this will depend on its ability to persuade the market that a risk-based approach in the current context is not an abrogation of its fundamental pursuit of price stability.”
In other words….Yea I know its a bubble but its a hell of alot better than having a correction…..I mean people love bubbles, think how popular you’ll be Ben. C’mon play ball, forget about tomorrow we’ll worry about that when we get there.
That is what is transpiring at Jackson Hole this weekend.
