Greenspan Put


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Greenspan Put

A term coined in the late 1990s describing Federal Reserve chairman Alan Greenspan's loose monetary policy. Throughout this period, Greenspan and the Fed kept interest rates rather low to encourage growth in the stock markets. Investors assumed from this policy that stocks would continue to rise and, thus, they could enter long positions and sell them at a higher price on or before a certain date, creating a put option in practice, if not in contract. While this was likely not the intent of the Federal Reserve at this time, investors used this investment strategy anyway. See also: Irrational exuberance.
References in periodicals archive ?
This phenomenon became so entrenched in investors' minds, that it got a name of its own: the Greenspan Put.
As Federal Reserve Chairman Alan Greenspan put it in congressional testimony in early 2004, "The problem that exists is because they have a subsidy, granted not by the Congress but by the expectation that government will bail them out in the event of a crisis.
Federal Reserve Chairman Alan Greenspan put in a pitch for the nation's small businesses Thursday, calling them critical in determining whether a community prospers or not.
Greenspan put the markets "on notice" that he reserved the right to raise U.