The term "irrational exuberance" was coined by former Federal Reserve Chairman Alan Greenspan in a speech he gave on December 5, 1996. In the speech, Greenspan discussed the booming stock market of the time and expressed concerns about whether it was sustainable. He warned of "signs of exuberance in equity prices that are not fully justified by the long-term stream of our earnings and dividends" and suggested that the market was in a state of "irrational exuberance."

Greenspan's speech is often credited with being one of the first public statements by a major policy maker to warn of a potential bubble in the stock market. The phrase "irrational exuberance" has since become a commonly used term to describe market speculation and excessive optimism that can drive asset prices to unsustainable levels.