Well worth reading if you're interested in this sort of thing. Interested in like, you know, your money, your investments...
Well worth reading the entire interview, which is not very long.
Greenspan says bubbles can’t be stopped without ‘crunch’. Former Fed chairman worries about false dawns and the looming Fed exit
MarketWatch: What is the biggest challenge facing the Fed?
Greenspan: How to unwind the huge increase in the size of its balance sheet with minimal impact. It is not going to be easy, and it is not obvious exactly how to do it.
MarketWatch: As the Fed is looking at the exit, do you think we can get through this without upsetting the economy?
Greenspan: I certainly hope so. I certainly think they will. But it is going to be difficult.
MarketWatch: Do you expect a sharp market reaction to the first hike?
Greenspan: Of course. Look what happened when the first indication of tapering occurred. Markets have always been sensitive. They reflect animal spirits.
He's referring n the last question to when interest rates begin to rise, and what will happen to bonds.
MarketWatch: Some economists argue that the economy has just been bubble after bubble and that we’re doomed to repeat this cycle.
Greenspan: Well, I agree with that. I have come to the conclusion that bubbles, as I noted, are a function of human nature. We don’t have enough observations, but my tentative hypothesis to what we’re dealing with is that both a necessary and sufficient condition for the emergence of a bubble is a protracted period of stable economic activity at low inflation. So it is a very difficult policy problem. I do believe that central banks that believe they can quell bubbles are living in a state of unrealism.
"Human nature." The greed/fear cycle.
Again, well worth reading the entire interview, which is not very long.
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