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The fallacy of monetary policy in the U.S. is to believe this money will go to the man on the street. It won't. It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols... Very happy. Very good for the Fed. Congratulations, Mr. Bernanke.
Earth is abundant with plentiful resources. Our practice of rationing resources through monetary control is no longer relevant and is counter-productive to our survival.
My bottom line is that monetary policy should react to rising prices for houses or other assets only insofar as they affect the central bank's goal variables - output, employment, and inflation.
I find that many entrepreneurs are trying to do everything when it would be cheaper and more time-efficient to delegate, even if there are monetary costs associated with that.
Giving Northern Europe a veto over Southern Europe's budgets will not hold a monetary union together. The euro zone will continue to need the weaker countries to stomach decades of high unemployment to grind down wages.
Monetary policy cannot do much about long-run growth, all we can try to do is to try to smooth out periods where the economy is depressed because of lack of demand.
Monetary policy itself cannot sensibly be directed at reducing imbalances.
It is understandable that the Fed injects cash to avoid the collapse of the stock market, but basically it is bad policy for monetary authorities to intervene to save speculators from bankruptcy. This is not their role.
A good monetary policy follows inflationary expectations and not historical numbers.
