Alan Greenspan, who died yesterday at the age of 100, resided as chairman of the Federal Reserve Board during a two-decade long period (1987-2006) of almost unprecedented American boom and economic dominance that is now inaptly called “The Great Moderation.”

He was appointed by Reagan in his second term, then through the prosperous Clinton years, then the successful early years of the George W. Bush presidency.

During his reign, inflation average between 2 and 3%.  He operated under the “Volcker rule” using commodity prices as a forward-looking gage of inflation to keep prices stable.  And it worked magnificently.

Two Great Fed Chairmen Greenspan and Volker

Here is our quick overview of this amazing period:

Job Creation: 38 million
Inflation average: 2.5%
Annual Stock Market Return (nominal): 10.8%
Annual Stock Market Return (Real): 7.8%
Value of $100 invested from 1986-2007: $842
Added GDP 1986 – 2007: $4.9 trillion to $14.1 trillion

It was an era of massive job creation, a 20 year bull market, rising real incomes, relative price stability, and total American economic supremacy. We do an injustice to Greenspan to call this era “the Great Moderation.”  All that was “moderate” was inflation. It was the “Great American Boom,” which thankfully has resumed under Donald J. Trump.