According to former Federal Reserve Chair Alan Greenspan, the current monetary policy environment carries numerous risks and is “counterproductive” when it comes to restoring the global economy. He stated his opinion that negative interest would lead to "misuse of capital." One of the fundamental problems of accommodative policies that Greenspan mentioned is the lack of business investment which is also a reflection of caution on the part of businesses concerned about the outlook. His comments directed specifically toward the US economy underlined the dangers of entitlement spending and how it is shifting investment sentiment and further devastating productivity as private capital remains on the sidelines awaiting greater clarity on the future of policy. This comes amid the rebound in Fed Funds futures to back above 50%, implying a stronger probability of at least one additional rate hike before the end of 2016.
Greenspan Warns on Economy: "We’re In Trouble"
Daily Analysis - 02/03/2016