People dont realize that we cannot forecast the future. What we can do is have probabilities of what causes what, but thats as far as we go. And Ive had a very successful career as a forecaster, starting in 1948 forward.
ALAN GREENSPANYet deregulation set the stage for an enormous wave of creative destruction in the 1980s.
More Alan Greenspan Quotes
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Greenspan, who knew so much more than most, knew far less than most supposed.
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Regulators have not been able to achieve the level of future clarity required to act pre-emptively.
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The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.
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Market financed withdrawals of home equity in recent years.
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Developing protectionism regarding trade and our reluctance to place fiscal policy on a more sustainable path are threatening what may well be our most valued policy asset.
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Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.
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Need to consider not only the most likely future path for the economy but also the distribution of possible outcomes about that path.
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I cannot conceive of a politically feasible solution to this problem which will overdo cutting the deficit, where overdoing means harming the economy. It might be technically possible, but it is not realistic.
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Without calling the overall national issue a bubble, it’s pretty clear that it’s an unsustainable underlying pattern.
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Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets.
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The problem is not lack of regulation but unrealistic expectations. What we confront in reality is uncertainty, some of it frighteningly so…
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Before I met Ayn Rand, I was a logical positivist, and accordingly,
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Given our inevitably incomplete knowledge about key structural aspects of our ever-changing economy and the sometimes asymmetric costs or benefits of particular outcomes, a central bank.
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But material success is possible in this world and far more satisfying when it comes without exploiting others.
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Well, you probably will always believe there should be laws against fraud, and I don’t think there is any need for a law against fraud.
ALAN GREENSPAN