>If he has justification for raising interest rates (like signs of inflation or possible signs of inflation) then he should raise rates. It is NOT his job, however, to give personal opinions on value of the market to achieve the same affect.
If a soaring market will actually cause inflation, then he can and should make policy decisions based upon what the equities markets are doing. And he is entitled to anticipate the possibility of inflation (before it is evident), so as to stop it before it kicks up.
As you should know, he's also concerned about the tight labor market--how we've been lucky that wage inflation isn't rampant by now (the economy has been around full employment for quite some time). He knows that wage inflation isn't there yet, but he truely believes that what is going on is a deviation from the norm--and that one day, we'll eventually return to those norms (i.e. the tight labor market will cause inflation, eventually).
>The market has soared for more than two years while inflation has been held in check.>
But now we are really approaching nose-bleed levels. Many people thought that the market was too high last year. But this year, it's even higher (in fact, for the first time ever, I started thinking that the market was fair or richly valued). More importantly, inflation won't begin as soon as the market turns begins to soar (as in, 1995), but after a while, it will. Keep in mind, that the Japanese market soared for years before the crash....
Did you watch his HH testimony? He made his views very clear--and deliberate.
FRED: No, I don't want to re-start our pissing contest. I just thought your post was incorrect. As for your economic degree: That great that you have a minor in it. I am a sophomore, and have only take one economics class. I might only take one more class. For the rest, I'll learn independantly (I don't have time to take more econ classes, all the things I have to take and still get out of here in 4 years).
Sal Habash |
