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Greenspan: Stability Fanned Speculative Excesses

In a speech today, Federal Reserve Chairman Alan Greenspan said that the US economy’s flexibility and stability have fanned speculative excesses [WSJ]. [1]

Here’s the text of his speech [FRB] [2]

Although the business cycle has not disappeared, flexibility has made the economy more resilient to shocks and more stable overall during the past couple of decades. To be sure, that stability, by fostering speculative excesses, has created some new challenges for policymakers. But more fundamentally, an environment of greater economic stability has been key to the impressive growth in the standards of living and economic welfare so evident in the United States.

Greenspanspeak Translation: because the economy is so stable and flexible, its more risky. hmmm…