me:
> US active policy has not been very successful.
Yoshie:
I've read claims that the US Central Bank has been better at managing bubbles than the Japanese Central Bank. We'll see how it will handle the deflation of the housing market here.
The Fed's policy is to let bubbles happen. It simply responds to their bursting (e.g., the Fed's rapid and repeated interest-rate cuts in 2001 and after). To respond to the housing bubble's bursting would involve a reversal of its current policy. I would guess that it's not that the Fed is better than the BoJ but that the bubble that burst in Japan was much larger. The Japanese bubble involved not just stocks but housing, whereas the US has "enjoyed" serial bubbles, first stocks, then housing. -- Jim Devine / "These capitalists generally act harmoniously and in concert, to fleece the people." -- Abraham Lincoln
