A shot at Dudley

Donald Luskin, in an op-ed with the WSJ, is firing some shots at NY Fed President William Dudley for saying that Fed can identify asset bubbles before they happen.  Of course, that’s apart from the role the Fed seems to be ready to take – regulator of the big institutions that could be significant enough to cause huge systemic risk.  Not that that one’s already a thumbs up for many. Anyway, Luskin’s response to what Dudley is suggesting:

More broadly, there’s little reason to expect the Fed can deal effectively even with a bubble identified well before the fact, or that it might not do more harm than good trying. While John Maynard Keynes and Milton Friedman didn’t agree on much, they did agree that the Great Depression was caused less by the stock market crash of 1929 than by the Fed’s tight-money policies aimed at curbing stock speculation (which those policies failed to do).

An interesting read, CONTINUE.

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