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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. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| Greenspan puts a lot of faith in the markets, which is understandable. FEDERAL Reserve chairman Alan Greenspan put on his Santa Claus hat and gave world stock markets a welcome Christmas present. Today's Lex column in the Financial Times, "The Greenspan Put," argues that the fundamental need for the 50 basis point rate cut "is far from clear. |
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