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As I read through and listen to Greenspan's testimony, I am struck by the emphasis on his willingness to hold rates down for a substantial amount of time in order to ensure economic activity. In other words, keep the liquidity flowing for as long as it takes to see economic measures (as opposed to financial market measures) start to turn appreciably.

This stance is fueling financial markets in a large and perhaps dangerous way. It has not, however, helped broad economic measures like employment and capex. So there is the bet he is making: keep liquidity pumping and the financial markets humming creating wild speculation in the financial markets (the Greenspan put) in the hopes of producing real economic growth despite the fact that this liquidity has not shown signs of working.

Thinking of the bet that I am reminded of an aphorism: in a ham and egg breakfast, the chicken is involved but the pig is committed. With the current policy "bet", Greenspan is "involved", but you, I, and the rest of the US? We're committed.

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