Here’s then Fed Chairman, Alan Greenspan, speaking to the Economic Club of New York in 1997 during Asian Financial Crisis.
This is when “can kicking” by Asian policymakers transitioned into “ass kicking” by the financial markets, which will surely take place in Europe again and also in the U.S. unless policymakers implement and maintain the necessary structural adjustment policies for economic and fiscal sustainability. And no, folks, QE is not structural adjustment.
We used to describe capital flight as “hot money”. But we soon recognized that it was not the money that was “hot”, but the place it was running from…
Reality eventually replaces hope, and the cost of the delay is a more abrupt and disruptive adjustment than would have been required if action had been more pre-emptive.
The former Chairman also loved and used the term, “like a hot knife through butter,” to describe how markets can tear through the international reserves of a country in disequilibrium or rip through technical support levels in various markets.
What would he say about the dollar right here, right now?
(click here if chart is not observable)