Nov 18, 2009

Ben Bernanke on identifying bubbles

It is inherently extraordinarily difficult to know whether an asset’s price is in line with its fundamental value. It’s not obvious to me in any case that there’s any large misalignments currently in the US financial system. The best approach here if at all possible is to use supervisory and regulatory methods to restrain undue risk taking and to make sure the system is resilient in case an asset-price bubble bursts in the future.

~ Ben Bernanke, Federal Reserve chairman, “On the Outlook for the Economy and Policy," NY Economic Club, November 16, 2009

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