Greenspan: “Apres moi, le deluge”

From Paul Kasriel’s excellent Northern Trust piece today on the U.S. Federal Reserve being checkmated right now by both rising real estate and rising production prices:

If the Fed hikes interest rates now to preempt inflation of goods and services prices, it risks bursting the housing bubble, which, in turn, could do severe harm to the financial system. But if the Fed maintains its current “unnaturally” low interest rate policy, it invites an acceleration in price increases of goods and services, which will necessitate rate hikes down the road, when the housing bubble is even more inflated. If I were Greenspan, I would retire now to write my memoirs, leaving a note in my desk drawer reading: apres mois, le deluge.

Just by way of counterpoint, here is some recent comparative data on the number of new California real estate licenses issued. This 44% increase is, in any circumstance, fairly remarkable.

2002-2003: 47,000
2000-2001: 32,600