Al Greenspan, who passed away Monday at the age of 100, served as chairman of the Federal Reserve Board for nearly two decades, overseeing a period of sustained economic growth and stability often referred to as the “Great Moderation.” His tenure, spanning from 1987 to 2006, offers significant insights for current Federal Reserve policy.

Appointed by President Ronald Reagan in 1987, Greenspan was subsequently reappointed by President Bill Clinton and continued under President George W. Bush. He took the helm following a challenging era marked by volatile monetary policy and soaring inflation, which had climbed to 11% by the time Reagan assumed office. The 1970s were characterized by economic stagnation and declining real incomes, representing one of the most difficult periods for the U.S. economy since the Great Depression.

While Greenspan’s predecessor, Paul Volcker, is credited with curbing runaway inflation by tightening monetary policy—a move widely credited with launching a 40-year bull market—Greenspan is recognized for consolidating those gains and restoring confidence in the U.S. dollar on a global scale. Inflation during Greenspan’s leadership averaged between 2% and 3%, aided by his use of commodity prices as early indicators of inflationary pressures.

Under Greenspan’s stewardship, the U.S. economy experienced robust expansion. Despite the 1987 stock market crash, the recovery was swift, leading into a period marked by rapid growth throughout the 1990s and early 2000s. The S&P 500 surged significantly, growing more than ninefold over his 19-year tenure, while the nation added approximately 2 million jobs annually on average.

Greenspan was known for his cautious approach to potential market overheating. In a notable 1996 speech, he cautioned investors against “irrational exuberance,” reflecting concerns about inflated stock valuations even as tech giants like Apple, Amazon, and Google emerged and helped fuel market gains supported by relatively low interest rates.

Beyond monetary policy, Greenspan advocated for fiscal discipline, frequently urging Congress to reduce deficit spending. The only balanced federal budgets in the past half-century occurred during his time as Fed chair. This approach—coupling stable inflation, lower taxes, fewer regulations, and controlled government spending—has been credited with laying the foundation for America’s prolonged economic prosperity during this period.

During the 1990s, the U.S. dollar strengthened its position as the dominant global reserve currency. Several countries, including China, adopted “dollarization,” pegging their currencies to the dollar as a means to combat inflation and support economic reform.

Inflation remained relatively low until recent years, when the Federal Reserve under Jerome Powell responded to rising prices that peaked above 9% amid President Joe Biden’s administration. Some economic historians argue that, contrary to its nickname, the “Great Moderation” period was in reality a time of remarkable economic expansion, a trajectory that some policymakers today, including President Donald Trump, are seeking to revive.

Kevin Warsh, the current Fed chair, has publicly aligned himself with the monetary philosophies of both Volcker and Greenspan, emphasizing the importance of a stable dollar. Observers suggest that adhering to the principles established during Greenspan’s era could position the U.S. economy for renewed growth in the coming years.