The former central bank leader — nicknamed "The Maestro" by his supporters — said he worries the current economy could be heading on a path similar to 1979, when the 10-year Treasury note was yielding around 9 percent before surging dramatically, gaining 4 percentage points in just a few months.Greenspan said (video at link) that he "remembers vividly" that in 1979 no one believed that interest rates could go higher "basically because the United States is not an inflation-prone economy." And then there was more inflation and interest rates did go higher! Well then. Never mind that inflation in 1979 was a decade-long problem and the (I guess unexpected; I suppose I'll trust Greenspan on that) spike in 1979 had nothing to do with federal budget deficits. Doesn't matter: it's always 1979! The real problem here is that it's entirely unclear why a missed spike in inflation is any more damaging than any other economic policy mistake. Especially now. Given that conditions now don't look anything at all like what was going on in 1979.
[J]ust look at the man who insisted that credit default swaps had made the financial system stable, that there was no housing bubble, that the housing market was poised for recovery in 2006, telling us that with interest rates at their lowest levels ever, what we need to worry about most is … the threat of rising interest rates.Yup.
And: nice catch!