I just posted on this as a follow up comment to The Big Takeaway, but it merits a post of its own:
According to a report on Bloomberg, Bill Dudley said today that in order to get consumer price inflation down, asset prices have to deflate. This would be the first tacit recognition I’ve heard by anyone else of a point I’ve been making for years on iTulip and Financology – that asset price inflation and consumer price inflation are closely related.
If Stocks Don’t Fall, the Fed Needs to Force Them
This is big news, folks … Dudley is a former president of the New York Fed and I think this will ultimately factor into the Fed’s policymaking … that if asset price deflation doesn’t occur as an organic consequence of tighter monetary policy, the Fed will actively seek to force asset prices down.