Alan Greenspan fueled Americas boom and set a course for future prosperity

Alan Greenspan, who died Monday at the age of 100, presided over a two-decade-long period of almost unprecedented American boom and economic dominance that’s now inaptly called “The Great Moderation.” His long tenure as chairman of the Federal Reserve Board offers invaluable economic lessons that today’s Fed would be wise to heed.President Ronald Reagan nominated Greenspan as Fed chair in 1987, during his second White House term. There Greenspan remained until 2006, reappointed by President Bill Clinton and staying through much of George W.Bush’s presidency.His tenure followed a period of turbulent and often reckless monetary policy at the Fed. In the tumultuous 1970s, the Fed tried to juice a floundering economy with easy money, pushing inflation to as high as 11% on the eve of the Reagan presidency. Family incomes crashed in real terms as Americans’ after-inflation incomes shrank.It was the worst decade for the US economy since the Great Depression, sending the stock market into an extended slump.Greenspan’s immediate predecessor at the Fed, Paul Volker, is rightly credited with breaking the back of double-digit inflation by taking away the “punchbowl” of easy money.That helped launch a 40-year bull market on Wall Street and rapid gains in American GDP.But it was Greenspan who solidified the longer-term victory over inflation, and permanently restored global confidence in the dollar. During his reign inflation averaged between 2% and 3%. He operated under the “Volcker rule,” using commodity prices as a forward-looking gauge of inflation to keep prices stable.

 And it worked magnificently. The Reagan expansion that began in late 1982 hit a speed bump with the mini-stock market crash of 1987, but the recovery was swift — and in the 1990s and early 2000s, the economy shot up like an Elon Musk rocket.  Subscribe to our daily Post Opinion newsletter! Please provide a valid email.By clicking...