This is a follow up to my recent post on the tech bubble. In my view, 3-month T-bills are the best asset for estimating nominal risk-free returns that can be earned at various moments in time.  During some periods of US history, it’s possible to earn very large nominal risk-free returns (real plus inflation).  During […]

Tim Harford has a very good piece on bubbles in the FT.  This caught my eye: Yet even with hindsight things are not always clear. For example, I first became aware of the incipient dotcom bubble in the late 1990s, when a senior colleague told me that the upstart online bookseller Amazon.com was valued at […]

David Andolfatto has a reply to my recent post. The BLS data show housing prices rising by 10% after housing prices peaked? Not sure I understand this claim. I thought that the price of housing services entered into the CPI, not house prices directly. In any case, it would have been nice to have been […]

Talk about burying the lede!  Last night I did a post discussing how the people who say “I told you so” after bubbles are often suffering from cognitive illusion.  Only right before bed did I realize that a link in a quotation provided a perfect illustration of the phenomenon. One of the most famous pro-bubble […]

Think quick.  You have a housing bubble.  After you recognize the problem should you respond by building more houses or fewer houses?  The US responded by building fewer houses after 2006.  The Chinese government is responding with policy initiatives to encourage more construction.  Who is right?  I say they both are.  I would also argue that […]