US

Alan Greenspan: It Is Very Hard To Know What Stimulus Does

Alan Greenspan spoke to CNBC this morning about the state of the U.S. economy, how unemployment numbers could improve, and how calculating the stimulus multiple is very difficult.

  • 0:15 We kept rates low in 2003 because we saw plunges in the price index, and I still think it was the right move. The impact of the fall of the Soviet Union and the rise of China, coupled with the globalization of finance, set up a scenario that added to the housing bubble.
  • 4:30 We will begin to see unemployment improvement when output per hour slows down.
  • 5:45 It’s very hard to know what stimulus does. Econometrics can determine the impact multiple, but that is a model, absent of the larger realities. These computer models’ ability to forecast are awful.
  • 7:35 Long term interest rates are a function of the deficit.
  • 8:50 We are in a Democratic society, main street felt harmed by the crash, and they were right, in some cases, to focus on regulation.

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