Economists at the BIS (The Bank for International Settlements is a central-bank for the world) have issued an inane ruling that shows just how clueless they are. They told a Fed conference that "Central banks should tackle emerging asset bubbles head-on rather than wait till they burst and then clean up afterward."
The only point in question with these statists seems to be how much state intervention is necessary to �soften the blow� of these mysterious and seemingly natural and unpreventable �bubbles.� Not much though is given anymore as to whether these bubbles actually exist, and what, if any, is their cause.
Any economist worth a damn would start by asking what traits of the market could cause such �bubbles� to occur. The answer is simple: none. The self-correcting nature of a free market prevents any such �bubbles� from occurring by setting interest rates that accurately reflect the public's ever-changing time preference for future growth versus current spending. It is only manipulation by the only entity that has the power of a gun � the government � that can create changes large and lasting enough to create the �artificial� changes that cause economic depressions. The government cannot even create the so-called �booms� in the economy � it can only create destabilizing shifts to or from investment and consumer spending that disrupt the normal flow of goods and investment capital. It can also destroy very real economic growth � such as that during the 1920�s and 1990�s -- by practicing monetary and regulatory interventionism. I don't want to launch into a polemic on economics, so if you want to learn more about actual economics rather than pure interventionist propaganda, I recommend Mises.org, or Capitalism.net