Greenspan: Yields at Root of Economic Sluggishness

The video discusses the influence of presidential elections on Federal Reserve decisions, emphasizing the effort to remain neutral. It also explores the yield curve's impact on economic activity, highlighting the gap between long-term and short-term yields and its effect on capital spending, particularly in software and non-residential building sectors.

How did the Federal Reserve approach decision-making during presidential elections according to the transcript?

• They always delayed decisions until after elections.

• They remained neutral unless the economic outlook was crucial.

• They actively supported the incumbent government.

• They prioritized political events over economic outlooks.

What is the significance of the yield curve flattening as discussed in the transcript?

• It suggests a potential recession.

• It leads to increased interest rates.

• It indicates a strong economic growth.

• It has no impact on corporate decisions.

What prediction did Morgan Stanley make about the 10-year yield?

• It would rise to 5%.

• It would fall to 1%.

• It would fluctuate unpredictably.

• It would remain stable at 3%.

According to the transcript, what is causing the sluggishness in the American economy?

• Rising unemployment rates.

• High inflation rates.

• The spread between long-term and short-term Treasury yields.

• Increased consumer spending.

What impact does the spread between long-term and short-term Treasury yields have on capital asset investment?

• It encourages investment in long-term assets.

• It has no impact on investment decisions.

• It discourages investment in short-term assets.

• It creates a bias towards short-life expectancy assets.