The Bernanke Put: Will He Really Remove It?

In finance, a “put” is a contract that gives its owner the right to sell something—a stock, a bond, a tanker of crude oil—at certain price, regardless of the price in the market. A put is a guarantee, basically, and when the markets are falling it can be invaluable. But the word is sometimes used in a more general sense.

Back in the old days, when Mark Zuckerberg was in high school and Alan Greenspan was in Foggy Bottom, there was something called “the Greenspan put.” It was a commitment on the part of the Fed to cut interest rates and print money whenever the markets or the economy stumbled. Although its existence was officially denied, many investors believed it was in place, and this belief helped sustain the great stock market bubble of the late nineteen-nineties.

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