Fed 'lacks knowledge and tools' to burst bubbles

US - The Federal Reserve lacks the knowledge, foresight or precision tools it would need to pre-empt a stock market bubble, a senior Fed official said yesterday, and any attempt to do so would risk "severe collateral damage to the economy".

Ben Bernanke, one of the newest members of the Fed's board and a "permanent" voting member of its policymaking Open Market Committee, addressed recent criticism that the central bank could have spared the economy "needless trauma" had it "pricked" the stock

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