Greenspan’s Uncertainty Principle

This week we are going to examine in some detail Alan Greenspan's speech given today in Jackson Hole, Wyoming. I was working on an entirely different letter when this speech hit my inbox. I think it is so important that I am going to start over in the middle of a letter, which I cannot remember ever doing.

For better or worse, Alan Greenspan is one of the most important men in the world. His views matter and are taken quite seriously by the market. This is one of Greenspan's more significant speeches (it may come to be seen as his most important) and a departure from his usual opaque (or in Texan: clear as mud) style.

I think, come Monday, this speech will be seen by different parties in completely different ways. On the one had, I think this speech is destined to be hailed as the best example of how the Fed really works and as the rationale for the current Fed structure and role. Others will see it as yet another attempt to make excuses (remember "I was not responsible for the bubble" from the last Jackson Hole…