Don’t forget, economists: land is a separate factor from capital
Sir, If Alan Greenspan is arguing that monetary policy is ineffective in controlling asset bubbles, I agree with him. He also asserts convincingly that the model structures from which many (I would say most) derive their simulations have been consistently unable to foresee the onset of recessions or financial crises.
Perhaps the reason for this is that economists have forgotten that land is a separate factor from capital. Fluctuations in property values derive almost entirely from land values and not the man-made element. It is the fact that there is no cost to ownership that makes the land market function so poorly and this can be corrected only by fiscal means.