Alan Greenspan, Unsung Hero?

So says Samuelson:

It may ultimately be said of Alan Greenspan that he enjoyed his finest hour when the public admired him least. Let’s recall that only a few months ago the shaky economic outlook inspired fears of deflation — a general decline in prices caused by too much supply (of unemployed workers, unused fiber-optics and lots more) chasing too little demand. Now the U.S. economy is leading a global recovery. Greenspan and the Federal Reserve deserve much — if not all — of the credit for this turnaround…

What Greenspan & Co. may have done is to avoid a third big blunder. So much was beginning to go wrong with the economy at the end of 2000 — and the rest of the world was so dependent on the U.S. economy — that a timid reaction from the Fed might have been fatal. It might have further weakened both spending and spirits. But the Fed responded forcefully. It cut interest rates 11 times in 2001 and once again in 2002 and 2003. The Fed funds rate (on overnight loans between banks) went from 6.5 percent in late 2000 to its present 1 percent, the lowest since 1958.

None of this was preordained. The European Central Bank was more cautious. It cut rates much less and more slowly than the Fed. Greenspan & Co. seemed to be operating mostly by a seat-of-the-pants judgment that: (a) inflation wasn’t a present danger and (b) repairing the damage from the bubble economy required a long period of easy credit. Whatever the rationale, the Fed’s low short-term interest rates influenced the decline of rates on mortgages and bonds, which in turn rescued the economy.

Talk amongst yourselves.