Taps Coogan – May 25th, 2021

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Nobel prize-winning economist Robert Shiller recently spoke with CNBC in a short but sweet interview in which he notes that real inflation adjusted home prices “have never been so high and my data goes back over 100 years…”

Dr. Shiller notes:

“I did write about the roaring 20s… There are times in history when we have more latitude for our emotions and our social excitement and it seems like this is one of those periods… You talk about sentiment and sometimes people get excited and all sorts of things happen in distant markets.”

“(Real) home prices have never been so high and my data goes back over 100 years, so this is something. Now, we naturally look at the Federal Reserve as a source of stabilization and we have to thank them for having somewhat fulfilled that role for a long time, over 100 years, but I don’t think the whole thing is explained by central bank policy. There is something about sociology of markets that is happening. Then there is the question of can they stabilize it without having it crash. That’s hard to do.”

It is so hard to do that one might think it would be a priority of monetary policy to avoid bubbles in the first place.

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