While conflicting economic data leaves hope for both buills and bears, Alan Greenspan warns that, unlike Yellen, "US economic growth is not strong." He then slays another pillar - suggesting the exuberant job growth is anything but (as he focuses on weak productivity as he pinpoints entitlements as "crowding out capital investment" in America. The maestro then breaks the golden rule of central bankers and explains how The Fed was, in fact, the main driver of the P/E multiple expansion in stocks; and when asked if this ends as badly as last time? He concludes "It depends...When real interest rates start to move up, that's when the crisis could hit." The interview is somewhat stunning in its honesty (for a central banker) as he warns global "effective demand is extraordinarily weak - tantamount to the late stages of the great depression."
Some other excerpts...
"Lower long-term rates is not a conundrum, its an indication of how weak global economic growth is."
"effective demand is extraordinarily weak - tantamount to the late stages of the great depression."
"Monetary policy is not responsible for economic weakness - it's a fiscal issue."
The Fed is responsible for the inflation of the stock market
"Almost all the problems are due to a lack of long-term capital investment" - reflecting perfectly on our detailed explanations of company's preference for shareholder enhancement through buybacks rather than investing in the corporate growth of the economy... "nobody wants to invest in the long-term because nobody knows what is going to happen."
"Stock market is great - the economy is not."
You are right Alan...
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We suspect this will be the last time Greenspan is invited on The Truth Channel.