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This video is one of the shortest and best lessons on what really drives our financial markets. It also explains something about human nature that bums out Jon Stewart.

Greenspan can be a little dry, but worth listening to what he says. And really worth listening to Stewart’s great questions.

I have an MBA in finance and a minor in economics and actually had a professor who brought his pal Alan Greenspan to speak to us when I was taking a course on economic forecasting. Greenspan says the same thing now he said almost 30 years ago in that class. Not only have things not changed much, but human psychology and expectations still play a major role and provide a huge “unknown factor” in any forecasting model.

Why does this matter? It’s what helps set the interest you get from your bank, the rate you pay for a loan, and where the stock market goes. And after listening to this, you’ll know almost as much as any great economist. Only you won’t get paid as much for your opinions!

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