Asset bubbles are harmful for the same reason high inflation is
But asset bubbles ARE inflation - albeit of asset prices... "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
It's only 'inflation' if it's created by poor people asking for higher wages.
Currently, "narrow" inflation (CPI) is higher than the Fed wishes (2%), but the Fed can't raise rates to fight it, because of the knock-on effect on variable mortages. Stuck, the Fed. Does Bernanke dream of throttling Greenspan?
