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It's not so much about the asset prices as the debt.
Stock bubbles are pretty harmless so longs as they are not fueled by debt, like pre-1929 where 1x10 leverage was allowed. Had there been no debt, there would be no long lasting fallout.
When the music stopped from the 20's stock bubble, some people were deeply in debt, and the "lucky" ones were filthy rich, since they were the ones owed that debt. Just like today.
The last capitalist we hang shall be the one who sold us the rope.
--Karl Marx
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Two questions:
1. Should asset prices be managed?
2. Are depressions necessary to the business cycles?
If depressions are necessary, then fighting them is a mere exercise of populist reaction. If depressions can safely be avoided, should it be done through artificial support asset prices? Or should we focus on frequent and substantial technological or productivity gains?
Peter