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Thursday, November 07, 2013

The Greenspan Put Survives

Obama’s nomination of Janet Yellen to succeed Ben Bernanke as chairman of the Federal Reserve was joyously received in Wall Street.  Reassured that the “Greenspan put” (the readiness of the Federal Reserve to pump fiat dollars into the financial system to shore up stock and bond prices) remains in force, stock and bond market speculators turned on a dime and pumped the markets back up after word of Yellen’s nomination.  Financial market speculation will remain a no-risk game as long as the Greenspan put survives; speculators can be confident that they can borrow whatever amounts they need, at far-below-real-market interest rates.

Posted by Thomas E. Brewton on 11/07 at 08:39 PM
Economics • (6) Comments
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