I definitely believe that Greenspan’s intent was for consumer spending to pick up the slack of the drop in corporate spending after the dotcom bust. He even mentioned that he believed the ATM effect of rising house prices should prevent a major recession or a depression following the excesses of the ’90s.
However, I do believe that he saw something in 2004-2005 and was quiet, or was totally oblivious to all the fraud going on during that time. Surprising, yes, but eventually, when he did see it, he didn’t say anything, but raised rates quiety.
Imagine if he had said something? How would the markets have reacted back then? Who knows? Maybe they would have reacted the same as they are now.
