Not Everyone is Confused by Housing Bubbles

Eduardo Porter tells readers about confusion among central bankers about how to deal with international capital flows and asset bubbles like the housing bubble in the United States. While there has been considerable confusion among central bankers, this appears to be more linked to their lack of qualifications than the intrinsic complexity of the subject matter.

For example, Porter notes how Greenspan was confused by the inflow of foreign capital that kept long-term interest rates low even as...