Charlie Evans, hero of good sense:
Fed’s Evans: Bad Idea to Use Monetary Policy to Burst Bubbles by Michael S. Derby
Federal Reserve Bank of Chicago President Charles Evans said those who would prefer to tighten monetary policy to reduce the threat of new financial bubbles are barking up the wrong tree.
The central banker, who has been a strong supporter of the Fed taking aggressive actions to aid the economy, said that instead of using monetary policy actions to bolster stability in markets, the central bank should use its expanding portfolio of regulatory powers to target imbalances.
“Without adequate safeguards, excessive and persistently low interest rates could lead to excessive risk-taking by some investors,” Mr. Evans said in the text of a speech to be given in Chicago before the Financial Management Association Annual Meeting Luncheon. But those safeguards now exist: “Regulatory efforts can effectively minimize the risks of another crisis and increase the resiliency of the financial system,” the official said.