[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-324380-105":59,"doc-detail-324380-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","too-much-risk-read-online-free","Too Much Risk - read online free","","Policy-makers face a difficult choice: whether and how the Federal Open Market Committee should respond to asset prices when markets show signs of excessive risk-taking. The commentary reviews evidence that prolonged policy accommodation may have boosted liquidity and contributed to unusually low credit spreads, heightened speculative activity, and an asset boom-bust concern. It weighs arguments for using asset prices as predictors against doubts about identifying bubbles and acting without harming macroeconomic outcomes.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/too-much-risk-read-online-free/324380/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/too-much-risk-read-online-free/324380.png","ImageObject",300,407,{"name":92,"@type":93},"Aurelia","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-29","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",12,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What is the central policy question in the commentary?","Question",{"text":113,"@type":114},"Whether the FOMC should react to asset prices. The issue has two parts: using asset prices to forecast inflation and deciding whether to respond to other asset prices that may signal excessive risk-taking or an unsustainable boom-bust cycle.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"What evidence does the text cite regarding liquidity and market risk?",{"text":118,"@type":114},"It notes a large provision of liquidity over recent years and the decline in target federal funds rates from 6.5% to 1% between 2001 and 2003. It also points to FOMC minutes describing unusually narrow credit spreads and indicators such as increased initial public offerings and M&A activity.",{"name":120,"@type":111,"acceptedAnswer":121},"Why might low credit spreads still be concerning even if they usually indicate low risk?",{"text":122,"@type":114},"Credit spreads are often good signs, reflecting low default probability and stable conditions. However, the text explains that some people worry spreads are “unnaturally” low for the level of risk, suggesting excessive speculation.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},324380,1790464669,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},1099514068365,"https://ap-avatar.wpscdn.com/avatar/10000253d8d9f28188e?x-image-process=image/resize,m_fixed,w_180,h_180&k=1794309523707217728","# Too Much Risk?\n\nby Joseph G.Haubrich and Ben Craig  \nSome participants believed that the pro-longed period of policyaccommodationhad generated asignificant degree ofliquidity that might be contributing tosigns of potentially excessive risk-takingin financial markets.  \n—FOMC Minutes,December 14.2004Dspico iniom he emisaconcerm with rapidly rising prices ofassets,not goods and services.Thoughmany people are happy to sce their portfo-lios grow and their houses appreciate,others worry that this signals the start ofaboom and bust cycle that presages anotherrecession.In this Commentary,we exam-ine those concerns and the evidencebchind them,payingspccial attention towhat effect,if any,asset booms and bustsshould have on monctary policy.  \nThe policy question is clear in principle,even if the answer is not.Should theFOMC react to asset prices?The ques-tion really has two parts.Few peopledisagree that the FOMC can use assetprices as predictors of inflation,and tothe extent that some asset prices(long-term Treasury bonds,Treasury Inflation-Protected Securities.CPI futures)helpforecast inflation,it makes sense for theFOMC to use them.The second part ofthe question clicits more disagreement,however.Should the FOMC react toother asset prices that may signal exces-sive risk taking or the start of an unsus-tainable boom-bust cycle?  \nProponents of using asset prices take toheart the proverb “a stitch in time savesnine.\"They argue that a small actionearly on can prevent the asset boom fromgetting out of control,avoiding(or atleast reducing)a costly crash later.Opponents downplay the ability ofpolicymakers to detect a boom and dis-tinguish excess risk from a strong econ-omy.They believe that standard mone-tary policy,focusing on the inflation rate  \n# ecONOMICCOMMCNTCIRY\n\nFederal Reserve Bank of Cleveland  \nand economic conditions,will accommo-date assct price increases stemming fromhigher profits and increased productivityIn those cases where asset prices risebecause of excessive risk taking orunwarranted spcculation,they argue,asset prices will also show through toaggregate demand and be offsct bystandard monetary policy.  \nWe will take a more detailed look at thearguments for and against giving assetprices a prominent role in monetary pol-icy,but first it makes sense tolook at evi-dence for and against excessive risk tak-ing in the current financial environment.  \n■ Evidence:Building theCase?There's not too much controversy aboutthe fact that the FOMC has provided alarge amount of liquidity over the pastseveral years;the drop in the target fed-eral funds rates from 6.5 percent toI percent between 2001 and 2003 isgenerally taken as a good indicationof the stance of policy.A trickier task,given the richness and depth ofAmeri-can financial markets,is picking outasset prices that(allegedly)signalexcessive risk.We can delegate that taskto the FOMC,though;its December 14minutes record the asset prices thatconcern several committee members.They note:  \n...nar7zow credit spreads,apickupin ini-tial public offerings,an upturn in mergersand acquisition activiy;and anecdotalreports that speczlative demands werebecoming apparent in the murkets forsingle-familyhomes and condominiums.\"  \nAt first,it seems strange to worry aboutnarrow credit spreads.They are usually agood thing—a small diffierence betweenthe yield on risky corporate bonds andsafe Treasury bonds should signal a lowprobability ofdefault,less risk,lessuncertainty about corporate profits,anda generally strong economy with a  \nMarch 15,2005  \nAre asset prices climbing too far toofast?Do they signal the approach ofan unsustainable boom that theFOMC should stepin and stop beforeit gathersspeed?Bubbles are notori-ously hard to spot beforehand,andeven if we were better it it,no one issure what the best monetary policyresponse would be.  \nreduced chance ofarecession.Somepeople,however,start to worry whenthese numbers look “unnaturally”low.too low for the risk actually out there.That's when low sp","cbCaipxMY1dHQrBa","https://ap.wps.com/l/cbCaipxMY1dHQrBa","pdf",1084448,"English","# Too Much Risk?\n## Policy Question: Should the FOMC React to Asset Prices?\n## Evidence: Building the Case?\n## Credit Spreads and Default Risk\n## Mergers and Acquisitions and Firm Value","[{\"question\":\"What is the central policy question in the commentary?\",\"answer\":\"Whether the FOMC should react to asset prices. The issue has two parts: using asset prices to forecast inflation and deciding whether to respond to other asset prices that may signal excessive risk-taking or an unsustainable boom-bust cycle.\"},{\"question\":\"What evidence does the text cite regarding liquidity and market risk?\",\"answer\":\"It notes a large provision of liquidity over recent years and the decline in target federal funds rates from 6.5% to 1% between 2001 and 2003. It also points to FOMC minutes describing unusually narrow credit spreads and indicators such as increased initial public offerings and M\\u0026A activity.\"},{\"question\":\"Why might low credit spreads still be concerning even if they usually indicate low risk?\",\"answer\":\"Credit spreads are often good signs, reflecting low default probability and stable conditions. However, the text explains that some people worry spreads are “unnaturally” low for the level of risk, suggesting excessive speculation.\"}]","Too Much Risk - read online free | PDF",1789967766,13]