Asset prices fluctuate a lot and these fluctuations can have an important impact on the macroeconomy. Over the past 15 years, the United States experienced two great asset "bubbles" where asset prices reached hard-to-justify heights. In the late 1990s, the "dot com" bubble led the stock market to dizzying heights, but the bursting of this bubble led to the 2001 recession and a period of extended unemployment. In the early to mid 2000s, the housing bubble pushed housing prices to exceptionally high levels. The collapse of this bubble triggered a severe financial crisis and ushered in the Great Recession in December 2007. One school of thought holds that policymakers should try to pop asset bubbles before they get too big. By doing so, they can help the macroeconomy avoid the economic turbulence that follows when the bubble crashes. By taking a proactive approach, they can prevent large bubbles in asset prices and avoid the economic mess that follows. Another school of thought holds that asset bubbles don't really exist at all. They are reluctant to assume that the market is ever wrong (i.e. that prices are too high or too low). They assume that private investors putting their own money at risk are better judges of appropriate market prices than policymakers. Therefore, they tend to advocate a "hands-off" approach to asset prices, even when asset prices are reaching exceptionally high levels. What do you think? Should policymakers work to prevent asset bubbles from forming? Or should they take more of a laissez-faire approach when asset prices build, come what may? Please explain.