Mike Caldwell, 35, rolls a stack of bitcoin tokens at his shop in Sandy, Utah. Just as miners dig up precious metals, Bitcoins are mined digitally. Developed at the start of 2009 by an anonymous computer programmer, Bitcoins have been associated with the drug trade and tax avoidance. Because there is a finite supply of just 21 million Bitcoins, the expectation among its devotees is that the currency will continue to appreciate.WASHINGTON – The Federal Reserve’s super-low interest-rate policies have inflated a slew of dangerous asset bubbles. Or so critics say.
They say stocks are at unsustainable prices. California homes are fetching frothy sums. Same with farmland, Bitcoins and rare Scotch.
Under Chairman Ben Bernanke, the Fed has aggressively bought bonds to try to cut borrowing rates and accelerate spending, investing and hiring. Its supporters say low rates have helped nourish the still-modest economic rebound.
Yet some say the Fed-engineered rates have produced an economic sugar high that risks triggering a crash akin to the tech-stock swoon in 2000 and the housing bust in 2006.
On the eve of the Fed’s latest policy meeting Tuesday and Wednesday, here’s why — or why not — these five assets might be in a bubble: