Morning Must-Read: Noah Smith: Should the Fed Crash Now to Prevent a Crash Later?

Noah Smith: Should the Fed crash the economy now to prevent a crash later?: “To many, the implication is clear: The Fed needs to raise interest rates in order to prevent a destabilizing market crash. That isn’t a good idea…. Higher asset prices due to lower safe interest rates aren’t some kind of nefarious plot–this is just Finance 101…. That’s rational price appreciation, not a bubble…. When practically everyone is convinced that asset prices are relatively high, like now, it’s pretty obvious that there aren’t many greater fools out there. If you look at past bubbles, such as the late-’90s tech bubble or the mid-2000s housing bubble, you see that there was always a large contingent of society that thought it wasn’t a bubble at all…. Who nowadays thinks that there’s some special Big New Thing that’s going to push stocks and bonds and commodities all to stratospheric heights forever?…. I say we hold off on our calls for anti-bubble rate hikes.