Ask Colin

Can Greenspan's lowering of interest rates make a difference to either the bear market or market cycles? (Early March 2001).

Can Greenspan's lowering of the interest rates make a difference to either the bear market or the market cycles? (Early March 2001).

I don't know. However, more generally, the actions of governments with fiscal policy and central banks with monetary policy can alter the shape of the business cycle - make it steeper or flatter. They can sometimes delay the inevitable, but only at the risk of the eventual pain being greater. Every bull market in modern times has been accompanied by statements that we can now control the business cycle and will never have another depression, or "hard landing", or whatever you want to call it. Beware always of people saying it will be different this time. It never has been and it is wishful thinking that it will be now.

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