Aug 2, 2010

Alan Greenspan on long-term interest rates

There is no doubt that the federal funds rate can be fixed at what the Fed wants it to be but which the government has no control over is long-term interest rates and long-term interest rates are what make the economy move. And if this budget problem eventually merges to the point where it begins to become very toxic, it will be reflected in rising long-term interest rates, rising mortgage rates, lower housing. At the moment there is no sign of that because the financial system is broke and you can not have inflation if the financial system is not working.

~ Alan Greenspan, the Maestro, former Fed chairman, Meet the Press interview, August 1st, 2010

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