
By encouraging asset bubbles and permitting Wall Street to extract undue gains from the volatility, policymakers in Washington encourage bad behavior on a large scale. I recently opined that quantitative easing and mortgage interest rate stimulus bail out Wall Street, not Main Street. Quantitative easing serves to inflate house prices, and although homeowners benefit from this policy, the banks benefit even more; in fact, it's necessary for their survival. However, inflating asset values through quantitative easing is not the only way decisions made in Washington help Wall Street over Main Street. No, the problem goes deeper than that. Who benefits from bubbles? In an ideal world, asset prices would rise and fall gently based on the productive value of the…[READ MORE]