end of one ry
duch Alana Greenspana loosens up
errors only b trend on bonds
In January 2006, Alan Greenspan ended his eighteen and a half year tenure at the head of the Fed. He was replaced in the position by Ben Bernanke, an academic who was supposed to continue with little rights in communicating with the public in the sleep policy of his iconic and therefore wealthy predecessor. During 2006, however, real estate prices fell and the threat of the impact of a speculative bubble rose in the air. What many players couldn’t imagine became a reality the following year, when the biggest financial crisis since the 1920s broke out. Ben Bernanke was drawn into a flurry of events, after their demise the financial market changed beyond recognition. In 2008, Alan Greenspan was invited to a formal hearing before the US Parliament. Here he sprinkled his head with ashes and confessed his mistakes, especially in the area of banking sector regulation. With that, his dark ideal image of the central bank changed permanently and his influence declined. The sour fruit brought by his cheap money policy from 2001-2004, however, was soon forgotten. Ben Bernanke could not come up with another recipe for economic prosperity, other than flooding the market with cheaper pensions in the current volume. He was nicknamed Helicopter Ben on that account. The cause of the crisis was determined to be insufficient regulation of the banking sector and their speculative activities, not loose monetary policy. Academician Bernanke fulfilled his promise to join the war and made the decision-making of the money committee transparent. His successors Janet Yellen and Jerome Powell continued this trend. Here is the reason for dot plots and other conquests of banking communication, which the current chairman Kevin Warsh promises to limit. Alan Greenspan died this Monday at the age of one hundred. With this end, one long chapter of central banking seemed to be closed, and his very spirit of common sense stirred. Alan Greenspan’s time had one characteristic that the current era lacks. The threat of inflation, which our predecessors at the Fed were unable to get rid of, makes investment in government bonds unsuitable. Just like stocks, bonds also gained investor popularity during the Greenspan period and their prices strengthened. Let’s hope that Kevin Warsh lives up to his promise and gets inflation to 2 percent, which will start a b-trend on real bonds. Greenspan’s time would thus be in full swing. Disclaimer: This link is only informative and is not recommended as an investment by law. 256/2004 Coll. about companies on the capital market. When compiling this link, the author used publicly available sources. Neither Roklen Holding a.s. nor Roklen360 a.s. are responsible for any errors in the text or data.