Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Thank you, Mr. Chairman. First, on inflation itself I would certainly agree that, if asset prices are not declining, there is less financial risk than if they were. However, we should keep in mind—though I have to think more about this—that, if goods prices are declining, then the real cost of capital is rising and I think we still have the classic zero bound problem. So it is better if asset prices are rising as opposed to declining, but I don’t believe that solves our problem with deflation. I do want to reflect on this more, but that’s my initial—

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