Greenspan’s Irrational Exuberance Looks Entrenched, 20 Years On

Two decades after then-Federal Reserve Chairman Alan Greenspan fretted about asset prices reaching unsustainable levels -- a pronouncement that caused a brief interruption in the U.S. stock rally -- his successors might be tempted to warn again markets are getting ahead of themselves.

“Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets,” Greenspan said in a speech on Dec. 5, 1996. That comment alone has an eerie resemblance to the disinflationary climate and tumbling interest rates that have afflicted the world in recent years.