Has money creation and bond-buying by the major central banks, intended to address the effects of old bubbles, now induced new bubbles? As Fed Chairman Janet Yellen recently told Congress, “It is fair to say that our monetary policy has had the effect of boosting asset prices.” Is the asset price boosting too much or no problem?
US house prices in major cities were up 13 percent in 2013 and are already back above their long-term inflation-adjusted trend, and global markets have been marked by a risk-increasing thirst for yield. According to the Bundesbank, German houses are overpriced. Furthermore, there are house price bubbles in Brazil and Canada, and foreign debt expansions make the Fragile Five large emerging markets — Brazil, India, Indonesia, South Africa, and Turkey — more fragile.
So are there new bubbles or not? What are we to make of the current asset price inflations? Our expert panel will discuss.