Bullard’s Bubble Warning: “I Could See This Getting Away From Us”

Friday, August 26, 2016
By Paul Martin

by Tyler Durden
Aug 26, 2016

While it has been a relentless jawboning session from various Fed speakers this morning, what caught our attention was an interview between CNBC’s Steve Liesman and the Fed’s recently converted uber-dove, St. Louis Fed president James Bullard on the topic of Fed mistakes, policy and “unintended” consequences such as asset bubbles.

When asked what he thinks about bubbles in risk assets, and specifically if the Fed’s ultra low rates have caused them, Bullard says “the Fed model has nothing about asset price bubbles, most models don’t have anything about that”, and as a result no Fed model ever forecasts asset bubbles, which incidentally explains why the traditional side-effect of Fed policy over the past decade has been, drumroll, asset bubbles. When Liesman continues to press, Bullard says that any opinion on the issue one “has to make a judgment.” So when asked “what is your judgment” on asset bubbles, Bullard replies “I think we are on the high side of fairly valued, I could see the process getting away from us, maybe tech stocks, maybe others.”

The Rest…HERE

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