However, the return journey from rampant inflation and asset bubbles always carries insolvency and defaults along for the ride.
But the return trip to a more normalized economy brings with it the bursting of debt and asset bubbles.
There are already concerns about overheating, rising inflation and asset bubbles.
Foreign governments risk overheating and asset bubbles in their economies if they maintain inappropriately low interest rates in order to keep their currencies undervalued vs. the U.S. dollar.
Those in attendance at the two-day Central Economic Work Conference said pressures could arise from potential inflation and asset bubbles, meaning higher interest rates could be on the horizon.
And because the asset and credit bubbles formed in many countries simultaneously, the hangover this time may well be worse.
The past couple of years have demonstrated that the use of monetary policy had its costs too, not in consumer inflation but in rising debt levels and growing asset bubbles.
Fed purchases should help America's economy by pushing asset prices up and the dollar down, but they may lead to a damaging rise in commodity prices and fuel asset bubbles in emerging economies.
For the time being, their rise will be most notable in "the zone of sanity, " the vast range of territory between south Texas to the Great Plains, which largely resisted the housing and stock asset bubbles of the past decade.
Another round of asset purchases by the Fed will only create more risk taking and pump up asset bubbles, without helping the economy or producing jobs, while making the eventual removal of stimulus that much more difficult.
And everybody needs to work harder on understanding asset bubbles and what happens when they burst.
Their immediate dilemma is how to sustain recovery without inflating credit and asset-price bubbles.
The rapid build-up of reserves in the emerging world fuelled the asset and credit bubbles, and rich-world central bankers failed to counter it.
Under the newly minted 2010 Dodd-Frank Act, the Commodity Futures and Trading Commission is chartered to monitor non-agricultural commodities trading, to promote transparency and to prevent asset bubbles.
More radical reforms, like breaking up too-big-to-fail financial firms and returning to Glass-Steagall-type restrictions, which are needed to stave off asset bubbles and tame systemic risk, may be politically difficult to implement.
In particular, by keeping interest rates too low for too long, the Federal Reserve under Ben Bernanke has underpriced credit and increased risk taking, fueling asset bubbles in the bond and commodity markets.
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Could the program help spur asset bubbles and set up a potential fall in the bond market?
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One reason was that asset bubbles and cheap credit eased life for everyone.
Then, in July 1997, the Asian Crisis hit, and everyone looked on in horror as hot money from global hedge funds, fueled by the steroid of high leverage, brought the economies of Thailand, Malaysia and Indonesia to their knees, first creating asset bubbles when it flowed in, and then causing the local currencies to collapse when it was suddenly withdrawn.
Many other positive feedbacks such as the wealth effect, relative valuation methods, and the increased ability to borrow against inflated asset prices operate in financial bubbles and bull markets.
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They cause asset "bubbles" when they move in massively and asset price destruction when they exit in panic.
Recently everything has been about these emerging markets, and fears of either overheating or asset bubbles have subsided.
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Low rates have encouraged excess borrowing, by both individuals and governments, and discouraged saving, fueling new asset bubbles at the expense of legitimate investment.
In declaring victory, they overlooked the very nucleus of this past crisis: namely, the enormous debt levels and bubbling inflation that created fragile asset bubbles.
What's more, the evidence suggests higher inflation is depressing growth by eating into consumer incomes while ultra-low interest rates are crushing savers and inflating new global asset-price bubbles ironically, including potentially in Canadian residential property.
In Crash Proof , I talked about how our economy suffered from the co-morbid diseases of asset bubbles, excessive debt and consumption, and insufficient savings, capital investment, and production.
Likewise, the bubbles and crashes that have afflicted asset markets ever since Holland's tulipmania in the 17th century and right up to the subprime-mortgage bubble are also cousins of the prisoner's dilemma.
Other than investing in a volatile stock market, housing is the only asset to hold and that can lead to pricing bubbles.
Interest rates were too low for too long, and this is partly to blame for the succession of asset bubbles, but low interest rates alone could not create this type of calamity.
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