economy
What Greenspan Got Right
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TL;DR
- Alan Greenspan's tenure as Federal Reserve chairman (1987-2006) is re-examined, highlighting his "Maestro" nickname and his role in the 1990s tech boom.
- Greenspan prioritized 'casual empiricism' – observing the economy directly – over backward-looking macroeconomic data and rigid rules like the Taylor Rule.
- His skepticism of tepid productivity statistics, despite the increasing importance of computers, led him to support lower interest rates, fostering investment and economic growth.
- This policy environment enabled the U.S. to achieve technological dominance, with companies like those in the 'Magnificent 7' emerging.
- The article draws a parallel to the current AI revolution, suggesting that official statistics may not capture AI's productivity impact, and that current Fed tendencies to raise rates could stifle necessary investment.
- It advocates for a Greenspan-like approach to encourage AI development and maintain U.S. competitiveness, referencing Texas's market-driven success in battery storage as an example of enabling growth through less regulation.