Please, could somebody urgently brief Fed Chair Janet Yellen on the fact that there are different kinds of bubbles?

Sir, Robin Harding reports that Janet Yellen holds that the Fed “is more interested in having a resilient financial system that can cope when asset bubbles burst than it is in popping them through rate rises” “No need to lift rates to curb risk, says Yellen” July 3.

I would totally agree with her… if only we found ourselves within a productive bubble and not as now within a useless bubble. Let me explain.

There are bubbles based on a lot of risk taking which albeit sometimes they have very large costs, at least takes us forward. And then there are bubbles, like this one based on risk aversion, that though just as costly, keeps us, in the best case scenario, stamping waters.

For instance the dotcom bubble cost us a lot, but left some useful advances, while the housing bubble with its AAA rated securities backed with mortgages to the US subprime sector was pure pain with no gain.

Unfortunately it seems that no one has briefed Janet Yellen about the implications of risk-weighted capital requirements for banks.