If we could recognize patterns that lead to these bubbles, we could see them coming and adjust policy to protect wealth accumulation and the economy as a whole

The global financial crisis and American wealth accumulation: The Fed needs a bubble watch

by John H. Makin

The global financial crisis destroyed over one-fifth of accumulated American wealth (real net worth of households and nonprofit organizations) in just one year: 2008. That huge loss was on top of a far more modest but still significant 1.62 percent wealth loss in 2007. Both the US stock market bubble burst in 2000 and the housing bubble implosion of 2008 contributed to the current situation, reinforcing the need for a Federal Reserve “bubble watch” program. If we could recognize patterns that lead to these bubbles, we could see them coming and adjust policy to protect wealth accumulation and the economy as a whole.

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