Somebody stop the bubble machine!

The New Yorker on Bernanke's debacle. There are many, many incidents that give one pause, but this one stands out for me:

The other event that changed Bernanke’s career occurred in the summer of 1999, at the height of the Internet stock boom, when he and Gertler were invited to present a paper at an annual policy conference organized by the Federal Reserve Bank of Kansas City. The topic of the conference—which takes place at a resort in Jackson Hole, Wyoming—was New Challenges for Monetary Policy. Then, as now, there was vigorous debate among economists about whether central banks should raise interest rates to counter speculative bubbles. By increasing the cost of borrowing, the Fed, at least in theory, can restrain speculative activity and prevent the prices of assets such as stocks and real estate from rising excessively.

A day late, I' m afraid; I was only reminded of Stan Freberg when reading Avedon on Tom Lehrer.

Plus ça change....

And speaking of banana republics:  Read more…