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By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives.

Alan Greenspan

This decade is strewn with examples of bright people who thought they built a better mousetrap that could consistently extract abnormal returns from the financial markets.
ALAN GREENSPAN

Better Built Decade Example Financial Market Mousetrap People
Need to consider not only the most likely future path for the economy but also the distribution of possible outcomes about that path.
ALAN GREENSPAN

Consider Distribution Economy Future Likely Outcome Path Possible
All taxes are a drag on economic growth. It’s only a question of degree.
ALAN GREENSPAN

Degree Drag Economic Growth Only Question Tax
The probability of ten consecutive heads is 0.1 percent; thus, when you have millions of coin tossers, or investors, in the end there will be thousands of very successful practitioners of coin tossing, or stock picking.
ALAN GREENSPAN

Coin Consecutive Head Investor Million Percent Pick Probably Stock Ten Tosser
To succeed, you will soon learn, as I did, the importance of a solid foundation in the basics of education – literacy, both verbal and numerical, and communication skills.
ALAN GREENSPAN

Basic Communication Education Foundation Importance Learn Solid Soon Succeed
Although the outlook is clouded by a number of uncertainties, the central tendencies of the projections .. imply continued good economic performance in the United States.
ALAN GREENSPAN

Central Cloud Country Number Outlook Projection Tendency Uncertain
I do not deny that many appear to have succeeded in a material way by cutting corners and by manipulating associates, both in their professional and in their personal lives.
ALAN GREENSPAN

Appear Corner Cut Deny Manipulate Material Succeeded
How do we know when irrational exuberance has unduly escalated asset values?
ALAN GREENSPAN

Escalate Exuberance Irrational Unduly Value
I believe that the general growth in large [financial] institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically — I should say, fully — hedged.
ALAN GREENSPAN

Belief Context Dramatical General Growth Institution Market Occur Risk Structure
I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market.
ALAN GREENSPAN

Gold Governor Happen Little Market Question Raise Treasury
There’s an interesting question here because if the gold price broke in that context, the thermometer would not be just a measuring tool. It would basically affect the underlying psychology.
ALAN GREENSPAN

Context Mean Price Psychology Thermometer Underlying
Fear and euphoria are dominant forces, and fear is many multiples the size of euphoria. Bubbles go up very slowly as euphoria builds.
ALAN GREENSPAN

Dominant Euphoria Fear Force Many Multiply Size
They then need to reach a judgment about the probabilities, costs, and benefits of the various possible outcomes under alternative choices for policy.
ALAN GREENSPAN

Alternative Benefit Choice Judgement Policy Probability
I’m a plain soap kind of guy.
ALAN GREENSPAN

Guy Kind Plain Soap
I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.
ALAN GREENSPAN

Clear Guess Out Particular Turn Warn You
Gold, unlike all other commodities, is a currency…and the major thrust in the demand for gold is not for jewelry.
ALAN GREENSPAN

Commodity Currency Demand God Gold Jewelry Thrust Unlike

By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives.

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By far the most significant event in finance during the past decade has been the extraordinary development and expansion of financial derivatives.

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