Understanding the Federal Reserve, Alan Greenspan on the Daily Show

If you want to understand why interest rates are cut, what the Federal Reserve does, and how it ties in with the stock market, you need to spend 7 minutes 46 seconds watching Alan Greenspan on the Daily Show (Video is below).

This is very basic information and honestly I found it extremely beneficial.

Barry from the Big Picture (if you haven't read his blog before you're really missing out) basically sums up what Greenspan admitted to John Stewart:

1. Excess money causes inflation.
2. Fed easy credit favors stock market operators at the expense of savers.
3. The Fed believes that the market trades more on perception of what the Fed is or will do instead of the actual policies.
4. The Fed must make the market perceive that the system is sound.
5. The presence of the Fed guarantees there is no ‘free market’.
6. He still can’t forecast the economy or whether there is a bubble or too much exuberance.

The video is below, and note to RSS Subscribers you probably will have to click through to view it (If you don't want to watch you can read the script at Barry's blog). The interview was to promote Greenspan's new book, The Age of Turbulence: