This paper presents how monetary policy, restricted only by price stability, may easily become propitious to asset inflation and eventually to a financial crisis. This risk is particularly high when the financial system lacks proper regulation and effective supervision. Hasty liberalization,...

The Federal Reserve System or the Fed is one of the most prestigious institutions in the world. Founded by the Federal Reserve Act in 1913, the Fed has the responsibility of setting the monetary policy of the U.S. The Fed’s actions affect the money supply in the U.S. market which has a direct...