First point - Summers and here
"So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? Summers’s answer is that we may be an economy that needs bubbles just to achieve something near full employment – that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn’t just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s."
Disagreement with Summers theory, here.
We need bubbles:
"So how can you reconcile repeated bubbles with an economy showing no sign of inflationary pressures? Summers’s answer is that we may be an economy that needs bubbles just to achieve something near full employment – that in the absence of bubbles the economy has a negative natural rate of interest. And this hasn’t just been true since the 2008 financial crisis; it has arguably been true, although perhaps with increasing severity, since the 1980s."
Disagreement with Summers theory, here.
Second point - Greenspan
Bubbles are the byproduct of well-executed monetary policy management:
"I used to discuss the issue at the Fed, “What do we get by being very successful in forecasting?” And I say a bubble. In fact I think the evidence probably is conclusive that a necessary and sufficient condition for a bubble is a prolonged period of economic stability, stable prices, and therefore low risk spreads, credit-risk spreads."
And on the 1994-1995 soft landing policy, and how it led to more speculative activity:
"Because our actions failed to knock the economy down despite a 300bps increase in the federal funds rate, it elevated the long-term asset value expectation. If that is true, and I raise it as a hypothesis because I don’t know how you could prove it one way or the other, it is saying that our very efforts made the situation worse. And the notion that you could calibrate monetary policy to suppress a boom against the human nature bubbling up has no factual basis."
