The Fed Goes Hunting For "Asset Price Bubbles"

Tyler Durden's picture

As the world's investors wait anxiously for the next piece of bad news from Japan, China, Europe, or US as a signal to buy, buy, buy on the back of a renewed "stimulus" of freshly printed money that has comforted them for 5 years, it seems the Fed is turning its attention elsewhere:

  • BULLARD SAYS MONITORING FOR ASSET BUBBLES `IMPORTANT CONCERN'
  • BULLARD SAYS ASSET PRICE BUBBLES MAY BECOME `BIG CONCERN'

The embarrasment continues:

  • BULLARD DOESN'T SEE PRICE BUBBLE LIKE IN PRE-CRISIS HOUSING

Because the Fed was accurate in spotting the "pre-crisis housing" bubble, right?

And the punchline:

  • BULLARD SAYS FED HAS BETTER `SYSTEMS' FOR `FLAGGING' BUBBLES

For now though, of course, the Fed's Bubble-o-Flagger (which can also be yours for four easy payments of $29.95) has no batteries. Pointing out the irony that the Fed creates the bubbles... and then when it becomes a "big concern" it promises to do something about it if it every sees one.  Finally, we are delighted that the schizhophrenia of the central planners continues to be exhibited for all to see: first Yellen tells everyone to buy stocks on Tuesday with an uber-dovish retracement of her "6 month" flub, and now Bullard is saying to watch out for bubbles. What can one say but... economists.

As a gentle reminder of just how these bubbles are formed...

Bubble Formation: start at the bottom left...

Bubble Bursting: ...and end with a 'debt crisis' and a 'rush for the exits'

Rinse and Repeat - Simple. QED