Mishkin: It's Cool That The Fed Is Blowing Another Bubble Because This Kind Of Bubble Is Harmless

Mishkin: It's Cool That The Fed Is Blowing Another Bubble Because This Kind Of Bubble Is Harmless

While Mishkin is clearly a smart guy, I have to disagree with him on this. First of all you can argue that leverage (this time by governments and not individuals) is funding the bubble. Secondly (and probably more importantly), bubbles, of any type, lead to allocational errors (too much investment in industries that are overvalued, too little in those that are undervalued). And finally, bubbles, when burst, cause pain, just ask those who lost jobs in the dot.com burst.