Greenspan: Yield Curve ‘No Longer Useful’ Gauge Of Economy

Federal Reserve Chairman Alan Greenspan announced in Congressional Testimony today that the "yield curve was no longer a useful gauge of the economy."

Greenspan also downplayed the risk of big foreign holders of US Debt.

In related news, the Onion reported that upon retirement, Greenspan will be joining the Conference Board, where he would be placed in charge of the Leading Economic Indicators.

What's been said:

Discussions found on the web:
  1. mh497 commented on Nov 3

    Rumor has it he said “It’s different this time” also, but we’re still trying to find it in the statement.

  2. donna commented on Nov 3

    Inversion? What inversion?

  3. Klaw commented on Nov 3

    Thanks for the links.
    Grace be with you………..

  4. jimbo commented on Nov 3

    man, Greenie gonna put the boys of ECRI out of business w/ all that stuff. lol

  5. scorpio commented on Nov 3

    talk about “no longer useful”. g’bye alan!

  6. Algernon commented on Nov 3

    Greenspan is right concerning the yield curve. This is a unique phenomenon of our central bank’s restraint being over-ridden by Asian central banks & other foreigners buying our 10-yr notes.

  7. STS commented on Nov 3

    I didn’t find that quotation in the text of Greenspan’s testimony (at least not at the URL provided). Is there some other source, or were you paraphrasing?

    He pretty clearly implies that the yield curve needs to be interpreted differently because of the impact of globalization on expected future inflation, but “no longer useful” seems a bit beyond his meaning.

  8. calmo commented on Nov 4

    This is what I call Greenspan’s pep talk.
    Don’t worry. [Because he does.]
    But umpteen 25bp increments later, it sinks in: I could’ve raised 50bp maybe even 75. Now, as the spread is moving, but maybe still contracting, is the time to blow the horn: “I’m not afraid of any ole yield curve invertion. I’m not.”

  9. me commented on Nov 4

    Why do I always lose when someone says “Its different this time”?

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