Ben Bernanke’s fatal mistakes may be harming the global
economy
“This points to a
key problem with the Fed’s “Great Monetary Experiment,” namely that it has
inflated asset prices to unsustainable levels. Bernanke hoped that by making
people feel richer, higher asset prices would induce them to spend more. After
a run of good years, however, U.S. stocks have approached bubble valuation
levels. Given the dollar’s role as the global reserve currency, Fed policy has
also pushed down interest rates around the world, thus stoking real estate
booms from Beijing to Vancouver. The trouble is that asset prices – whether
stocks, bonds or property, both in the United States and abroad – are now
vulnerable to any future normalization of interest rates – just as the housing bubble
and the subprime mortgage crisis followed from the Fed’s attempt to exit the
Alan Greenspan easy-money era.”