# Is Greenspan solely responsible for the economy boom of the 90's? **URL:** \ **Category:** Great Debates\ **Created:** [December 20, 2000, 9:54pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590 "2000-12-20T21:54:49Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Moe](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/moe/32/2972_2.png) [@Moe](https://boards.straightdope.com/u/Moe)\ **Post date:** [December 20, 2000, 9:54pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/1 "2000-12-20T21:54:49Z")
So I says to my Dad I says “Dad, the internet and computer technology is responsible for getting us out of the recession” and he explains that it was the fact the Greenspan lowered the interest rates which allowed people and businesses to borrow money in order to invest in the many businesses that have benefitted from computers and the internet, and thus not the internet itself. Furthermore, he remains adamant that Clinton had nothing to do with the economy. I admit, I know nothing. What do you all think? ---
**Author:** ![jodydafish](https://avatars.discourse-cdn.com/v4/letter/j/87869e/32.png) [@jodydafish](https://boards.straightdope.com/u/jodydafish)\ **Post date:** [December 20, 2000, 10:18pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/2 "2000-12-20T22:18:03Z")
It’s a chicken/egg argument. Computers, the internet, and the like made everyone more productive. Over the long term, productivity…and not interest rates have driven the market. This is why companies have frequently boomed during wartimes. While bankers clearly create cash flow and the such which make technology happen…it seems to me to be technology advancements themselves(i.e. planes, trains, and automobiles so to speak) which have historically guided the markets. A fabulous book on the historical context of the market with regards to historical market forces (and it is pretty straightforward) is called: THE GREAT GAME: THE EMERGENCE OF WALL STREET AS A WORLD POWER, 1653-2000. By John Steele Gordon ---
**Author:** ![Danimal](https://avatars.discourse-cdn.com/v4/letter/d/bb73d2/32.png) [@Danimal](https://boards.straightdope.com/u/Danimal)\ **Post date:** [December 20, 2000, 11:05pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/3 "2000-12-20T23:05:38Z")
I don’t think the U.S. (and world) economic boom of the '90s can be explained by just one factor. In America, I think Greenspan has contributed. Also, federal spending on economically nonproductive items, both military and domestic, is not increasing as fast as it was. And if your dad is determined to credit Greenspan, then he had better grit his teeth and credit Clinton too, for re-appointing Greenspan twice. In the world at large, the growth of the computer industry and the Internet is very important, as you mentioned. Also, the Latin American countries are much less politically unstable than they were; most have gone democratic, are settling down and beginning to grow. I suspect this has helped. And the Asian countries, especially China, grew fantastically throughout the decade(with the strange exception of Japan, I don’t know what’s up with that). Just the musings of an amateur; I’m no expert on economics. ---
**Author:** ![obfusciatrist](https://avatars.discourse-cdn.com/v4/letter/o/4af34b/32.png) [@obfusciatrist](https://boards.straightdope.com/u/obfusciatrist)\ **Post date:** [December 20, 2000, 11:07pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/4 "2000-12-20T23:07:13Z")
And don’t forget that my Uncle Bob bought some socks back in 1992. This was taken by many economists, bankers, and market-watchers as a sure sign of renewed consumer confidence. He single handedly claims credit for the New Economy that resulted but I am willing to give slight credit to Allen Greenspan and TCP/IP. ---
**Author:** ![jcgmoi](https://avatars.discourse-cdn.com/v4/letter/j/a9adbd/32.png) [@jcgmoi](https://boards.straightdope.com/u/jcgmoi)\ **Post date:** [December 20, 2000, 11:41pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/5 "2000-12-20T23:41:28Z")
Danimal said: > [@](#): > > credit Clinton too, for re-appointing Greenspan twice. Credit Clinton as well for naming Robert Rubin as Sec of Treasury and having the sense to follow his advice, and for the tax increase of 93, even though it was a disaster politically (GOP takeover in Congress and all). Deficits came down, then turned into surplusses, freeing capital to spur those productivity gains. ---
**Author:** ![mangeorge](https://avatars.discourse-cdn.com/v4/letter/m/d78d45/32.png) [@mangeorge](https://boards.straightdope.com/u/mangeorge)\ **Post date:** [December 20, 2000, 11:47pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/6 "2000-12-20T23:47:37Z")
The president, esp. a two-term president, is ultimately responsible for the economy. Can we at least say “Thanks, Bill”? Peace, mangeorge ---
**Author:** ![WillGolfForFood](https://avatars.discourse-cdn.com/v4/letter/w/82dd89/32.png) [@WillGolfForFood](https://boards.straightdope.com/u/WillGolfForFood)\ **Post date:** [December 21, 2000, 12:16am UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/7 "2000-12-21T00:16:18Z")
Greenspan is highly repected for being able to thread the needle for so long, adjusting interest rates at the right times and amounts to keep the longest boom in American history running without the spectre of runaway inflation rearing its ugly head. Of course, you can’t accomplish this unless the base economy is healthy enough to support it. Think of Greenspan as the master mechanic blessed with having a good racing engine ot work on - it’s in fine tune because he’s a master mechanic, but it’s also running well because it’s a good engine. I’ll be that Bush re-appoints him as well when the time comes… The only person I know who hates Greenspan is a local stockbroker fellow who has a segment on one of the local radio stations - and believes that Greenspan is an incompetent person because Greenspan didn’t lower interest rates **today** so that stock prices would rise **today**. Then again, I think this particular stockbroker’s idea of long term planning is deciding what he’s going to have for lunch. \ ---
**Author:** ![manhattan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/manhattan/32/7_2.png) [@manhattan](https://boards.straightdope.com/u/manhattan)\ **Post date:** [December 21, 2000, 12:37am UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/8 "2000-12-21T00:37:42Z")
This is a topic better suited to Great Debates. I’ll move the thread over there. And **WillGolfForFood** , that broker is indeed an idiot. Heck, prior to the WSJ article on Friday, the markets were only looking for a neutral bias. The easing bias would have been a bonus. He overplayed the expectations game and got whipsawed. TDB. ---
**Author:** ![brionl](https://avatars.discourse-cdn.com/v4/letter/b/7bcc69/32.png) [@brionl](https://boards.straightdope.com/u/brionl)\ **Post date:** [December 21, 2000, 1:51am UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/9 "2000-12-21T01:51:49Z")
I’ve been meaning to bring this up on a new thread, but it fits in to this one nicely. Neither Clinton nor Greenspan is responsible for the economic boom. It’s part of the cycle. I credit Greenspan with not screwing it up, and Clinton with letting him. I read an article in _Analog: Science Fiction, Science Fact_ magazine about Kondratyev cycles in the late 80s or early 90s that predicted the last ten years or so spot on. Declining economy until just after the 92 election, then _big_ boom until the early 00s, followed by a slight downturn. I found this site a couple of days ago when I was looking for more information on it: [http://www.kondratyev.com/reference/theory\_explained.htm](http://www.kondratyev.com/reference/theory_explained.htm) There is always the possibility that they are “retro-adjusting” the chart there, but it fits darn closely with what I can remember from almost ten years ago. I’ve been looking around the Analog web site, but couldn’t find any reference to the article. ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [December 21, 2000, 2:00am UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/10 "2000-12-21T02:00:03Z")
Another point of view: [“Father Greenspan Loves Us All”](http://www.thenation.com/doc.mhtml?i=20010101&s=greider). ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [December 21, 2000, 3:42am UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/11 "2000-12-21T03:42:38Z")
Well, to be sure Greenspan had a part in it. But, uh, there are six other chairs in the Fed, yeah? Greenspan is a pimp, but still he probably gets a lot more credit than he _necessarily_ deserves. Clinton probably had something to do with it, like every other president: he listened to his advisors. Presidents, AFAIK, usually don’t hold a degree in economics. ---
**Author:** ![Danimal](https://avatars.discourse-cdn.com/v4/letter/d/bb73d2/32.png) [@Danimal](https://boards.straightdope.com/u/Danimal)\ **Post date:** [December 21, 2000, 4:06pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/12 "2000-12-21T16:06:53Z")
Another thing that probably has helped the boom throughout the Western Hemisphere is NAFTA. Lowered trade barriers make every country more efficient. Both Bush Sr. and Clinton deserve credit for this one; Bush started it, Clinton finished it. ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [December 21, 2000, 4:37pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/13 "2000-12-21T16:37:10Z")
I would point out that the years of the most robust growth have been since 1994 when the GOP congress was elected. They have restrained spending, cut taxes, and approved free trade agreements. They have also defeated parts of the Clinton agenda which have threatened the economy, eg the health care debacle. I would also point out that although government can stifle an economy it can not create a good economy merely createe the conditins in which one can occur. The real credit goes to the myriad of businessmen and workers who have been working hard and producing. ---
**Author:** ![mangeorge](https://avatars.discourse-cdn.com/v4/letter/m/d78d45/32.png) [@mangeorge](https://boards.straightdope.com/u/mangeorge)\ **Post date:** [December 21, 2000, 5:57pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/14 "2000-12-21T17:57:22Z")
Credit for the good economy of the last several years is never going to go to Clinton and the democrats, is it. No matter what. And if the economy slumps over the next several years, who gets the blame? Clinton era fallout, right? Any bets? Peace, mangeorge ---
**Author:** ![Kimstu](https://avatars.discourse-cdn.com/v4/letter/k/ecd19e/32.png) [@Kimstu](https://boards.straightdope.com/u/Kimstu)\ **Post date:** [December 21, 2000, 6:22pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/15 "2000-12-21T18:22:34Z")
Here’s an alternative to **puddleglum** ’s view, from the article I cited above. According to this, the real source of the good times is indeed the fact that workers have been “working hard and producing”—for only slight increases (and sometimes even decreases) in their wages, in contrast to the huge financial boost delivered to the already well-to-do. > [@](#): > > The long process of disinflation [beginning in Volcker’s Chairmanship in 1979]–measured by the falling rate of increases in the Consumer Price Index–meant the Fed was gradually “hardening” the value of America’s money. A dollar, for example, was losing 10 or 11 percent of its value when the CPI was briefly rising in double digits during the 1970s inflation. But with the inflation rate steadily subsiding, moving downward in most years, the dollar’s value was growing, particularly if it was invested in the future through stocks or bonds. Thus monetary policy effectively delivered a discreet dividend, year after year, to the wealth-holders. Not surprisingly, they felt good about this (even if they didn’t understand why it was occurring). Their stocks and bonds or other financial assets would automatically be worth a bit more when they sold them because they would be paid in harder dollars–currency that had more purchasing power than the dollars they had originally spent to purchase the stocks or bonds. The silent, annual bonuses and the revived optimism among investors together fueled the soaring stock market that has stretched across the past eighteen years. > > Industrial workers, on the other hand, felt lousy, as did a majority or more of all wage earners, because their wages were being discreetly depressed, in real terms, by the same process. With the slower growth and higher unemployment artificially induced by Fed policy, wage increases were naturally subdued or nonexistent, especially among those in the bottom half with little or no bargaining power. In fact, for most of Greenspan’s tenure, average wages did not keep up with inflation. Many families experienced the paradox–their purchasing power seemed to be shrinking, even though inflation rates had fallen. Confused people sometimes blamed this squeeze on rising prices when the real problem was stagnant or falling incomes. > > The Federal Reserve was in fact explicitly targeting the wages of the American work force as a principal threat to economic stability. Greenspan articulated the connection less elliptically than Volcker, but one still had to parse his sentences carefully to get his meaning. Neither media nor politicians bothered to explain it very directly. This subtext of “winners and losers” helps explain why opaque technical verbiage surrounds the conduct of monetary policy. Who wants to tell the workers their own government is holding down pay? It also explains why, even after four years of accelerated growth, lower unemployment and rising real wages, so many American families refuse to join the celebration. Either the “good times” never got to them or they are still trying to get well from the Fed’s old medicine. Despite the boom, hourly wages in manufacturing remain mired, in real terms, at 1970s levels. For families at the median household income level, it has taken nine years to get back to where they were in 1989 (before Greenspan’s 1990 recession hammered their incomes). > > Among financial types, Greenspan’s logic was sometimes called “the 2 by 2 economy”–2 percent growth, 2 percent inflation–better known as Goldilocks. As Greenspan repeatedly proclaimed, it was impossible for the US economy to grow faster than 2-2.5 percent a year without reigniting fierce inflation, a ceiling he derived from expected growth in productivity and the labor force. The operating corollary (the theorem known as NAIRU) translated this growth ceiling into a somber rule: The unemployment rate must not be allowed to drop below 6 percent. Such rules were invoked regularly to justify Greenspan’s “pre-emptive strikes” against inflation and faster growth–raising interest rates when prices were subdued or even falling, slowing the economy when its productive capacities (plants and people) were still vastly underutilized. The danger that most spooked the governors was the threat of rising wages. > > Spirited critics from left and right did challenge this logic (futilely, since Clinton and both parties passively adhered to Greenspan’s dictum), and the supposed threat of inflationary wages proved to be nonexistent. As some of us argued, globalization and the competition from cheap labor overseas were imposing a most effective brake on both US wages and consumer prices (global influence on US markets is among the economic realities the Federal Reserve steadfastly ignores in its calculations). Corporate downsizings added to these pressures. For the record, the critics’ arguments have been spectacularly confirmed by events and, ironically, by the Greenspan boom itself. Once the Federal Reserve relented in early 1997 and permitted faster growth to unfold, wage increases picked up smartly and started making real gains against inflation, while the CPI held steady. The unemployment rate fell below 6 percent, then 5 percent, then even 4 percent, yet the calamity predicted by the Fed in such circumstances never occurred. ---
**Author:** ![erislover](https://avatars.discourse-cdn.com/v4/letter/e/71e660/32.png) [@erislover](https://boards.straightdope.com/u/erislover)\ **Post date:** [December 21, 2000, 6:38pm UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/16 "2000-12-21T18:38:15Z")
Naw, mangeorge, Clinton will never get the credit from some and Greenspan will tkae the blame for some. The economy is not controlled by the Fed. It is not controlled by the government. It is regulated, nudged, and sometimes downright coerced, but no one controls it. Its a wild animal in a really, really big cage. The Fed does its part. Greenspan’s hesitation to lower interest rates stems from a common fear: the bigger they are the harder they fall. Keeping an economy at over 100% employment (I believe 7% unemployment is considered to be a full job market) is an incredible feat. Indeed, what is most likely to happen is a small crash due to great speculation but not enough workers. Or, should I say, not enough quality workers. I reckon supply-side problems when the economy goes back down. If it does it gradually I’ll be happy enough. Mild recessions 🙂 But, I’m no economist. I’ve always liked Greenspan. I’d trust him to hold up his end of the bargain, but he can’t go it alone. ---
**Author:** ![The\_Ryan](https://avatars.discourse-cdn.com/v4/letter/t/7feea3/32.png) [@The\_Ryan](https://boards.straightdope.com/u/The_Ryan)\ **Post date:** [December 22, 2000, 12:58am UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/17 "2000-12-22T00:58:36Z")
> [@](#): > > \*Originally posted by mangeorge \* > \*\*Credit for the good economy of the last several years is never going to go to Clinton and the democrats, is it. No matter what. > And if the economy slumps over the next several years, who gets the blame? Clinton era fallout, right? > Any bets? > \*\* I’ll take that bet, seeing how you’ve already lost. About the only reasons I ever heard for voting for Gore was 1. He’s not Bush 2. He’ll continue the economic good times that Clinton has given us. I think that a major cause of the late eighties/ early nineties economic troubles was the adjustment from a cold war economy to a non-cold war economy, and the subsequent boom would have come no matter what, unless the president was **really** incompetent. ---
**Author:** ![jshore](https://avatars.discourse-cdn.com/v4/letter/j/b5e925/32.png) [@jshore](https://boards.straightdope.com/u/jshore)\ **Post date:** [December 22, 2000, 3:39am UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/18 "2000-12-22T03:39:57Z")
> [@](#): > > \*Originally posted by The Ryan \* > and the subsequent boom would have come no matter what, unless the president was **really** incompetent. Maybe fear of just this factor is responsible for your reason number 1) why people voted for Gore! By the way, I would subdivide your reason 1) a little: 1a) He’s not Bush when it comes to tax reform. 1b) He’s not Bush when it comes to environmental policy. 1c) He’s not Bush when it comes to ignorance of foreign policy issues. 1d) He’s not Bush when it comes to Supreme Court appointments. 1e) He’s not Bush when it comes to campaign finance reform (or lack thereof). And so on… I for one think those are some pretty compelling reasons! (Although I took advantage of living in New York and voted for Nader anyway!) ---
**Author:** ![Mandelstam](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Mandelstam](https://boards.straightdope.com/u/Mandelstam)\ **Post date:** [December 23, 2000, 6:33am UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/19 "2000-12-23T06:33:56Z")
**Kimstu** , thanks for posting the link to Greider’s article on Alan Greenspan. I had already read it, but you spared me having to find the link! I find Greider’s argument totally compelling. What sort of “boom” leaves people desperate for their next tax-cut and too squeezed to invest in their local schools, parks, etc.? To those of you who haven’t already read the article in its entirety, I suggest that you do so. ---
**Author:** ![Daniel\_Shabasson](https://avatars.discourse-cdn.com/v4/letter/d/da6949/32.png) [@Daniel\_Shabasson](https://boards.straightdope.com/u/Daniel_Shabasson)\ **Post date:** [December 24, 2000, 2:52am UTC](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590/20 "2000-12-24T02:52:38Z")
I think a lot of the reason for the boom is free trade. I can buy a decent winter coat for $50. Years ago, when such items were made in the USA, it would have cost twice as much. You just can’t argue with the fact that if stuff made overseas is cheaper and my dollar goes farther, I am wealthier. This also keeps inflation down, since the lower costs of producing aborad keeps prices down and corporate profits up. Another factor is the willingness of American consumers to spend. If people do not spend, the economy will falter. As long as there is robust spending, businesses will do well and there will be full employment. Americans spend like crazy – they even borrow money and spend it. Of course, too much debt, private and government, may catch up with us sooner or later. But the fact that it has helped the economy in the 90s is no big mystery. Also, the fact that the USA has had the ingenuity to create business in other sectors besides manufacturing has sustained the economy. We export services (insurance for example), music, films, hi tech/computer stuff. If other countries start to overtake us in these areas, we may find ourselves in some trouble. [Next page](https://boards.straightdope.com/t/is-greenspan-solely-responsible-for-the-economy-boom-of-the-90s/46590.md?page=2)