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October 24, 2005
Greenspan's Real Legacy
Before entering the Bernanke era, I want to say a word about Alan Greenspan. In my opinion, Greenspan's greatest achievement is that he showed us that central bankers didn't have to be afraid of booms and busts. He let the economy run hot in the 1990s, supercharging the innovation and tech boom. Then he acted aggressively to cut rates and cushion the bust. The jury is still out on the aftermath of the housing boom, but I believe it won't turn out bad for the economy either.
In the end, I believe that Greenspan's willingness to ride the booms and busts will turn out to be the best policy for innovation. Young startups thrive in the hothouse atmosphere of a boom, and then the busts weed out the losers.
For a longer discussion, see here
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Greenspan and his Legacy:
Greenspan will be remembered more for working with the Presidents he had, and successfully manuvering around Stock Market, Growth, and Fiscal Difficulties.
With Reagan, Greenspan survived the stock market crash of 1987, which periled many Asian countries by 1992.
George Bush I, Greenspan skillfully allowed insolvent banks to dissapear.
Bill Clinton, Greenspan allowed a steady by weak GDP growth to be OK. Ultimately leading to Strong Capital Gains.
George Bush II, Greenspan avoided a Hoover like Economic Disaster which was in place prior to 9-11. After 9-11, Greenspan realised that US Economy was on the brink of a "once a century" fracture. He instant and agressive economic moves have probably saved the Democratic World as most of us know it, from a 1930s outcome.
So where are we today, better than when Volker took over at the Federal Reserve, but not quite as good as when Mc Chasney Martin left in 1968.
George Bush II,
Posted by: Frank Drake at November 25, 2005 12:11 AM