Greenspan's Rich Legacy

When Alan Greenspan took charge of the Federal Reserve in August, 1987, businesspeople and economic cognoscenti thought they knew what they were getting: a dedicated inflation fighter who would be willing to provoke a recession to hold down prices. Eighteen years later, as Greenspan comes to the end of his long tenure as Fed chairman, his rout of inflation is almost unquestioned. But history is likely to celebrate Greenspan for another achievement: his ability to steer the US economy successfully through the white-water ride of the past decade. Through it all, Greenspan's hand guiding monetary policy was unparalleled. In retrospect, Greenspan's philosophy of central banking was simple: ride the booms, cushion the busts. Belying his reputation as an austere inflation hawk, Greenspan was one of the first economists to embrace the notion of a technology-driven productivity boom in the second half of the 1990s - the so-called New Economy.