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The term "Greenspan put" is a play on the term put option, which is a financial instrument that creates a contractual obligation giving its holder the right to sell an asset at a particular price to a counterparty, regardless of the prevailing market price of the asset, thus providing a measure of insurance to the holder of the put against falls in the price of the asset.
Susan Walsh/APFederal Reserve Chair Janet Yellen By Howard Schneider and Michael Flaherty WASHINGTON -- The U.S. economic recovery remains incomplete, with a still-ailing job market and stagnant ...
Monetary policy is the outcome of a complex interaction between monetary institutions, central banker preferences and policy rules, and hence human decision-making plays an important role. [100] It is more and more recognized that the standard rational approach does not provide an optimal foundation for monetary policy actions.
An easy money policy is a monetary policy that increases the money supply usually by lowering interest rates. [1] It occurs when a country's central bank decides to allow new cash flows into the banking system. Since interest rates are lower, it is easier for banks and lenders to loan money, thus likely leading to increased economic growth. [2]
The monetary policy of the United States is the set of policies which the Federal Reserve follows to achieve its twin objectives of high employment and stable inflation. [1] The US central bank, The Federal Reserve System, colloquially known as "The Fed", was created in 1913 by the Federal Reserve Act as the monetary authority of the United States.
A liquidity trap is a situation, described in Keynesian economics, in which, "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt (financial instrument) which yields so low a rate of interest."
Governments have sometimes resorted to excessively loose monetary policy, as it allows a government to devalue its debts and reduce (or avoid) tax increases. Monetary inflation is effectively a flat tax on creditors that also redistributes proportionally to private debtors.
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