If the Fed is not going to resort to monetary policy to constrain a credit expansion, nor most likely will it be able to predict a looming bubble, nor use macroprudential tools to their full efficacy, given the fragmented regulatory system and the fact that the Fed is still calibrating these tools and learning how to employ them, nor even the usage of targeted tools is a guarantee that frenetic market participants will discontinue driving prices up, then what exactly is left at the government's disposal? A very LT investor can thus rest assured that in the next major credit expansion the Fed will not stand in the way of stock market bulls.
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