Read this on San Jose Mercury Business News
The Federal Reserve's super-low interest-rate policies have inflated a slew of dangerous asset bubbles. Or so critics say. They say stocks are at unsustainable prices. California homes are fetching frothy sums. Same with farmland, Bitcoins and rare Scotch.
Under Chairman Ben Bernanke, the Fed has aggressively bought bonds to try to cut borrowing rates and accelerate spending, investing and hiring. Its supporters say low rates have helped nourish the still-modest economic rebound.
Yet some say the Fed-engineered rates have produced an economic sugar high that risks triggering a crash akin to the tech-stock swoon in 2000 and the housing bust in 2006.
On the eve of the Fed's latest policy meeting Tuesday and Wednesday, here's why -- or why not -- these five assets might be in a bubble: Stocks, housing, farmland, bitcoin and scotch.
My opinion is greatest when it comes to stocks. Reasons for saying that stocks are a waiting to burst bubble are reasonable given that I myself am an investor with real stocks. The Standard & Poor's 500 stock index has jumped about 26 percent since the Fed announced a year ago that it would buy $85 billion in bonds each month. And since the Fed's first round of bond buying at the end of 2008, stocks have soared 124 percent. Stocks outside the United States have also surged as other central banks have followed the Fed with their own low-rate policies.
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