the indirect result of investors accepting lower compensation for risk.
Such an increase in market value is too often viewed by
market participants as structural and permanent.
To some extent, those higher values may be reflecting the increased
flexibility and resilience of our economy.
But what they perceive as newly abundant liquidity can readily disappear.
Any onset of increased investor caution elevates risk premiums and, as a consequence,
lowers asset values and promotes the liquidation of the debt that supported higher asset prices.
This is the reason that history has not dealt kindly with
the aftermath of protracted periods of low risk premiums."
Chairman Alan Greenspan
Reflections on Central Banking.
At a Symposium sponsored by the Federal Reserve Bank of Kansas City,
Jackson Hole, Wyoming,
August 26th, 2005
Get Up and Dance, Twist ... and Shout.
The Crash, a twist of the yield curve, is a more realistic assessment of the risk/return of long term assets.
In game theory parlance, the Yield Curve of Keynes' Liquidity Trap is its Nash Equilibrium, so to speak.
To be sure, this is exactly what will happen on September 18tn, 2009 at 4:11 PM EST, so to speak.
"I do think the most relevant likely reason why we are dealing with what we are dealing with are
new forces ... in the international market,... Their nature and their behaviour is not something
we are going to fully understand, if ever; certainly except in retrospect."
Chairman Alan Greenspan
Central Bank Panel Discussion.
To the International Monetary Conference.
Beijing, People's Republic of China
(via satellite)
June 6th, 2005.
Take the On Line Insurance for Free: Type in and Register.
"But the essential issue here is one of insurance, with a relatively modest premium,
against a potentially catastrophic, very low probability event.
With that, Peter, would you outline your proposals to us?"
Chairman Alan Greenspan
Meeting of the Federal Open Market Committee.
August 24th, 1999
Our Anthem:
Those who don't have insurance:
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