Posts this month
A blog on financial markets and their regulation
In an interview with Gillian Tett in the Financial Times of October 25, 2013 (behind paywall), Alan Greenspan says:
Beware of success in policy. A stable, moderately growing, non-inflationary environment will create a bubble 100 per cent of the time.
The first objection to this argument is that a bubble is by definition unstable and so the term “stable” should be changed to “apparently stable”. That apart, Greenspan seems to be making inferences from just one event – the Great Moderation. From a sample size of one, inferences can be drawn in many directions, and many permutations and combinations are possible. Some possible variants are:
Finally, not many would agree with Alan Greenspan’s self serving claim that bubble blowing can be regarded as a successful policy.