Alan Greenspan receives a tremendous amount of adulation. I may be wrong but (1) I think that Greenspan, along with other central bankers, caused the great stock market bubble of the late 1990s, by opening the money supply spigots to fend off problems stemming from the collapse of Long Term Capital Management and the Russian bond default; and (2) when the bursting of that bubble threatened to cause a severe contraction, the money supply was increased again, with inflationary pressures this time going into a bubble housing market, which has ballooned from Sydney to New York. (Here in the D.C. area one hears that prices are going up due to building restrictions, hiring at the Department of Homeland Security, and immigration, but this doesn’t explain why London, Sydney, Boston, L.A., Toronto, etc., have all had similar price distortions increases, nor why housing prices even outside big cities are at all-time highs by many measures.) I foresee this bubble ending badly, too–not nearly as badly as the Nasdaq bubble for owners of housing, but perhaps a lot worse for the economy as a whole.
UPDATE: Coincidentally, just noticed that the Times has a story about Greenspan critics today.
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