by Brendan Brown
President Obama’s High Command at the Fed has had the luck which Napoleon looked for in his generals. The exercise of two Yellen puts seems to have delayed the late dangerous stage of asset price inflation to beyond 2016 Election Day.
Growing evidence and diagnostic power supports the view that the asset price inflation disease now afflicting the global economy is a historically rare form albeit also present in the last decade. President Bush, however, did not appoint lucky Fed generals. The Great Panic and Recession arrived before 2008’s Election Day.
The Two Types of Asset-Inflation Disease: Depression vs. Boom
Four episodes of asset price inflation since the mid-1980s (when Paul Volcker abandoned his “hard money” policy) have added importantly to the available data on the asset-price-inflation disease. The hypothesis has become plausible that asset price inflation, always of monetary origin, comes in two distinct types rather than just one.