The Greenspan Put

Danielle asked an interesting question, especially in light of the "Greenspan Put". 

Greenspan put was the moniker given to the policies implemented by Alan Greenspan during his tenure as Federal Reserve (Fed) Chair. The Greenspan-led Fed was extremely proactive in halting excessive stock market declines, acting as a form of insurance against losses, similar to a regular put option.

Market participants had widespread belief that former Fed Chairman would protect the market. 

That belief held until the DotCom crash.

If former Fed Chair Ben Bernanke could stop the housing bubble from collapsing, then he surely would have. 

If anything, this "put" belief reinforces collapses. 

If market participants believe the put is at the 3700 level, then I can assure you there will be massive short covering at or near that level. 

Q: Then what? 
A: When beliefs crash and the shorts have already covered, the bottom falls out. 

There is no put and it is not a matter of "let". The Fed can attempt to influence, but it is not in control.