Note: This is not Walter J "John" Williams of shadowstats.

Fed Uberdove Admits Policy Causes Asset Bubbles (And They're Here To Stay) - Full Speech

Submitted by Tyler Durden on 09/09/2013 11:12 -0400

San Francisco Fed head John Williams - known for his extremely dovish views on monetary policy (and support of record accomodation) - appears to have taken some uncomfortable truth serum this morning. In a speech reminiscent of previous "froth" discussions and "irrational exuberance" admissions, Williams explained:

Zitat

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The lesson from history is clear: asset price bubbles and crashes are here to stay. They appear to be a consequence of human nature. And the events of the past decade demonstrate the enormous human costs of asset price bubbles and crashes.

To understand the past and avoid a recurrence of the devastating events we lived through so recently, we need to acknowledge that investors and financial markets do not behave the way rational asset price theory implies. We need to incorporate these channels into the models we use for forecasting, risk analysis, and policy evaluation. This opens up a world where actions, including regulatory and monetary policy measures, may have unintended consequences—such as excessive optimism, risk taking, and the formation of bubbles—that are assumed away in standard rational models.

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http://www.zerohedge.com/news/2013-09-09...heyre-here-stay