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>I dont know if something is a bubble or not I was responding specifically to your statement: >Aditionally the idea that all these things are bubbles is quite

>I dont know if something is a bubble or not I was responding specifically to your statement: >Aditionally the idea that all these things are bubbles is quite suspect I agree with your point that monetary policy may not the right place to solve a property bubble. I disagree only with the assertions that property bubbles might not currently exist and that bubbles can never be easily identified. >Also, investment however flawed is simply not the same as a ponzi scheme. It is if the return on your investment is solely dependent on the continued input of other people's investments. >Fundamentaly however you have to realise that low interest rates are not artefical. I am not arguing that they are. Are you confusing me with another poster? >The idea that the central bank can indepentenly fix housing bubbles and create stable demand is just flawed, its simply not possible. Its the wrong tool for the thing you want to fix. I agree.

nickik 9y ago
If you could predict bubbles then you should be rich. If your meaning of 'bubble' is that at some unknown time in the future the price will be lower then it is now, then the concept is economically speaking useless. > It is if the return on your investment is solely dependent on the continued input of other people's investments. Still not the same thing. There is still a real asset that exists, it might change in price but it exists. In a Ponzi scheme that is not the case, it falls apart if there is no further and nobody will have anything. That is why you can go to prison for a Ponzi scheme but not for property speculation.