This question is being asked in the wake of record home price appreciation in the United States.

The widely followed Case-Shiller index showed housing prices at the national level increasing in May by more than 15% a year, the fastest pace in 30 years. According to the National Association of Realtors, the median existing home price sale exceeded $350,000, representing nearly a 24% rise in the twelve months ended May.

Desmond Lachman of AEI argues that, adjusted for inflation, U.S. housing prices are higher than they were at their peak in 2006. He fears the Federal Reserve could make the same mistake it did then when it kept interest rates artificially low. The Fed’s actions fueled the housing boom by making credit readily available at very low interest rates.

Lachman is particularly critical of the Fed continuing to buy $120 billion a month in U.S….

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