A couple of thoughts on monetary policy and asset valuation. First, tightening policy to ward off bubbles is like trading a SURE worse economic outcome in the near term for MAYBE a better outcome in the future. Who would want to do that when terms in office are just a few years?

Second, IN PRINCIPLE it’s true that macro prudential tools are more appropriate. The problem is that IN PRACTICE the tools the Fed has are inadequate. Counter $GME craziness by rising bank capital requirements?Even overall margin requirements would have dubious effects.

What is missing is a serious conversation about a) whether fin. stability should be an explicit Fed mandate, b) what tools the Fed should be given to deal with the issue, or c) whether this should be the job of another entity altogether. Never too late to start talking about it.