00:01
Monetary policy to eliminate asset price bubbles tends to be fairly uncommon when it comes to central banks, or at least they're not quite as proactive about it as some people may think they should be.
00:10
But there are a couple really good reasons for why the monetary policy is not oftentimes used to eliminate these asset price bubbles.
00:17
The first of which is that these particular asset price bubbles are often really difficult to identify.
00:24
So because they're so difficult to identify, it makes it difficult to actually implement any policy that could solve them.
00:32
And by the time these are identified, well, at that point, it may be too late to actually implement these policies that, again, could help them.
00:40
So because they're hard to identify, that's one good reason for why monetary policy is not oftentimes used to eliminate asset price bubbles.
00:47
The second reason is that particularly there is not thinking in terms of asset price bubbles in monetary policy, let's break it down a little bit.
00:57
Monetary policy tends to be very straightforward.
00:59
Now, if we use monetary policy, let's say in terms of interest rates, suppose we were to adjust the interest rates in an attempt to eliminate these asset price bubbles.
01:10
Well, in this case, we're going to see very real impacts of these changes to the interest rates...