I hasten to add, however, that tight regulation of hedge funds – such as we know for banks – is undesirable. In order to preserve the beneficial role that hedge funds play in today’s market, I would prefer a lighter approach. Greater, market-driven transparency could provide markets and firms with a better sense of the build-up of large, concentrated positions or crowded trades.
And, almost exactly 40 years ago, it assigned us monetary policy goals: maximum employment, meaning people who want to work either have a job or are likely to find one fairly quickly; and price stability,meaning inflation is low and stable enough that it need not figure into households’ and businesses’ economic decisions.