Scratching beneath the surface of the debate around countercyclical capital buffers, we find the normal level of duplicity that characterizes most debates about monetary policy.
New York Fed Chief Dudley recently suggested asset bubbles "emerge from the way market participant’s process information and trade" — thus ignoring the role of the central bank.
It is impossible to force the economic development of society by artificially encouraging investment and initially financing it with credit expansion. This policy can only have benefits if economic actors also elect to begin saving more at the same time.
Under an inflationary monetary scheme, big financial-sector players who get the new money first benefit the most. Ordinary households down the line then bear the brunt of price inflation.
