The Fed Was Also at Fault
The Federal Reserve System had much to do with the Internet bubble, and should not be as permissive the next time.
At the end of this chapter appear excerpts from the speeches and Congressional testimony of Federal Reserve Chairman Alan Greenspan given during the years of the bubble. In 1996 Greenspan saw the danger of a bubble and gave it a name, “irrational exuberance,” but the Federal Reserve (the “Fed”) did nothing. As the bubble grew, Greenspan pointed to it as a danger, and simultaneously justified it—as if he were debating the matter in his own mind and giving the debate public utterance. It seemed he couldn't make up his mind.
On the negative side, he recognized the threat to the economy from an unrestrained ...