Dear Ben, this is how you spot a bubble

Everyone agrees, says Matthew Lynn, that in run-up to the credit crunch, the US Federal Reserve ran far too loose a monetary policy. Everyong except Fed chairman Ben Bernanke.

A year into the greatest downturn since the Great Depression of the 1930s, there is still no real consensus on what caused the sudden collapse in the financial system. Greedy bankers? Lax regulations? Global imbalances? You can take your pick from an intellectual buffet table laden down with different theories.

But one thing seems to unite just about every shade of opinion. In the years running up to the credit crunch, the US Federal Reserve, along with other central banks, ran far too loose a monetary policy. They kept interest rates too low for too long, inflating asset bubbles in everything from houses to credit derivatives to fine art. Everyone agrees on this, except probably the most important figure in global finance the Fed chairman Ben Bernanke.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.