Courtesy of Mish.
In a Bloomberg Interview, former Fed chairman Alan Greenspan says “fairly soon” we could see a shift away from excessively low interest rates.
Greenspan Quotes
- We could see a shift away from excessively low interest rates “fairly soon”.
- “I think up in the area of 3 to 4, or 5 percent, eventually. That’s what rates have been historically, not only for hundreds of years, but thousands of years.”
- “We’re moving into the very early stages of inflation acceleration. That could be the trigger. There is only one long-term direction in interest rates and that is up.”
- “It’s a problem, as in going from where we are now to 4 or 5 percent. There’s a whole structure of adjustments which have taken place, basically since 2008, which have to be unwound, and that’s not going to be done without a problem.”
- If you listen to the debates and the primaries, nobody is addressing the fundamental issues that need to be addressed. Entitlements are rising and choking off gross domestic savings, and ultimately gross, domestic investment. And it’s the major cause of the reason why output per hour and productivity were so flat, not only in the United States, but throughout the developed world.”
Greenspan Video
Click on the above link for an excellent video.
No Savings Glut
Points five above is key. It’s really about socialism and free handouts.
In contrast to the widely-held “saving glut” thesis of Ben Bernanke, Larry Summers, and others, Greenspan, for all his faults, understands savings are both necessary and have been crowded out.
