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 GREENSPANBut how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
More Alan Greenspan Quotes
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I have one other issue I’d like to throw on the table. I hesitate to do it, but let me tell you some of the issues that are involved here.
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Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity are in a state of shocked disbelief.
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What an ideology is is a conceptual framework with the way people deal with reality.
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The only sustainable way to increase demand for vacant houses is to spur the formation of new households. Admitting more skilled immigrants, who tend to earn enough to buy homes, would accomplish that while paying other dividends to the U.S. economy.
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And whatever their publicized angst over Saddam Hussein’s ‘weapons of mass destruction.
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Without the triggers, that tax cut is irreponsible fiscal policy. Eventually, I think that will be the consensus view.
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Institutions of the newer participants in global finance had not been tested, until recently…recent crisis have underscored certain financial structure vulnerabilities that are not readily assuaged in the short run.
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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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But rules cannot substitute for character.
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Any informed borrower is simply less vulnerable to fraud and abuse.
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The Iraq War is largely about oil.
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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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It’s hard to overemphasize how important Ford’s deregulation was. True, most of the benefits took years to unfold-rail freight rates, for example hardly budged at first.
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Excessive optimism shows the seeds of its own reversal in the form of imbalances that tend to grow over time.
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Excessive optimism sows the seeds of its own reversal.
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Yet deregulation set the stage for an enormous wave of creative destruction in the 1980s.
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It seems superfluous to constrain trading in some of the newer derivatives and other innovative financial contracts of the past decade.
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I was a good amateur but only an average professional. I soon realized that there was a limit to how far I could rise in the music business, so I left the band and enrolled at New York University.
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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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Before I met Ayn Rand, I was a logical positivist, and accordingly,
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The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.
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Indeed, better risk management may be the only truly necessary element of success in banking.
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In the process we have created [a] privileged elite whose incomes are being supported at non-competitively high levels by immigration quotas on skilled professionals.
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All taxes are a drag on economic growth. It’s only a question of degree.
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If I seem unduly clear to you, you must have misunderstood what I said.
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Some succeed for a time. But while there may occasionally be mis-configurations among market prices that allow abnormal returns, they do not persist.
ALAN GREENSPAN