Timeline Thursday 5 December 1996

Events on Thursday 5 December 1996 1

• 1996 "Irrational exuberance" — the most famous phrase in central banking At a dinner hosted by the American Enterprise Institute on 5 December 1996, Greenspan delivers a speech containing the question: 'But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions?' The phrase 'irrational exuberance' enters the language immediately: stock markets around the world fall the following morning as traders interpret it as a warning about overvaluation. The Dow is at 6,437 on the day of the speech; it more than doubles over the next three years. Greenspan does not raise rates significantly to cool the market.