Greenspan's Conundrum Explained
Jude Wanniski
March 1, 2005


In his congressional testimony two weeks ago, Fed Chairman Alan Greenspan said without prompting that he didn`t understand why the Fed`s increases in the federal funds rate since last June 30 were not accompanied by increases in interest rates across the board. Indeed, for a period last fall, long-term bond yields were lower than they were when the Fed began the rate hikes.  In the following article, we explain Greenspan's conundrum.