In The USA: the Next Revolution

[Dayuhan]

Central banks can cool down boobs, and some of them really did so.

Now why would anyone want to cool down a nice hot set of... oh, ok, it's a typo, but really, who could resist?

Politicians cannot really cool down a boom, their failure is primarily that they fail to devise surplus budgets during a boom.

Politicians can work with their Central Banks; the separation is not nearly as complete as it's set up to be. There's also a great deal that politicians can do outside the purely economic realm. Many booms are to a large extent driven as much by psychological as economic factors, and none more so than the collective psychosis of the late '90's equity bubble, the reverberations of which are still with us. There's a lot that could have been done to influence perception there... but we were balancing the budget by taxing (very hypothetical) capital gains, and everybody was having fun, and who wants to spoil a good party?

Doing too much to cushion a bust is as bad, of course... have to wonder what would have happened if the derivatives markets had been allowed their deserved and needed crash in 2001/2002...