Matt Blackman

Can We Prevent Asset Bubbles?

Thoma;
I find it hard to believe just how fiscally naive you can be. Your supercilious sermon and conclusions assume that government agencies like the Fed, do their level best to adjust indicators and economic monitors purely based on the data and completely and rather stupidly in my opinion, ignore the fact that there are external forces at work, like politicians wanting to get re-elected for example, that result in these indicators being grossly distorted. I think it is pretty much accepted among serious data-response driven market participants that the vast majority of economic indicators generated by government agencies are manipulated past the point of usefulness in any real sense.

In other words, because these indicators (like GDP, CPI, PCE etc) grossly distort the true picture, relying on them to gauge the true picture is a fool's game. And any system based on these indicators to short-circuit the build up of bubbles will be virtually useless as a result.