The Great Asset Bubble (?)
At long last, asset-price inflation may have finally arrived.
In 32 years, I have never believed a word about U.S. government officials creating an “asset bubble.” The charge has often been made, initially in the mid- and late 1990s, less emphatically during the middle of the following decade, and then noisily throughout the 2010s. But as far as I can see, it has never been correct.
The 1990s featured the spectacular rise of growth stocks, along with Federal Reserve Chairman Alan Greenspan’s famous 1996 lament about the difficulty of recognizing when the stock market suffered from “irrational exuberance.” But it is difficult to attribute that behavior to government policies. Short-term interest rates averaged 5%, and fiscal policy was relatively conservative, with the United States running a budget surplus from 1998 through 2001.