A central bank staffer writes:
I enjoyed your macro lecture on recent macro thought. I suppose on this typology I have evolved from a Greenspanist with Producerist sympathies to a Producerist with vestigial Greenspanist sympathies. But there's a possibility you pass over. If effective regulation won't be forthcoming--whether due to regulatory capture or because financial innovation has outpaced the political system's willingness to extend regulators' reach--the central bank might have to tighten into the bubble. I call that Second-Best Punchbowlism...
This seems to me to be exactly right.
It is, I think, dead-on as an estimate of what is likely to happen. Central banks would prefer an effective system of regulation, but due to capture of legislatures by the baning sector they are unlikely to get it. Thus they are going to be driven to be always wondering whether they should be putting extra downward pressure on asset prices--with implications for employment and possibly growth.
The fact that "Punchbowlism" can be implemented by central banks by themselves makes it the default option.