Alan Greenspan is well loved among the governing elites and seldom criticized, because he convincingly plays the role of America's Dr. Pangloss. When the occasional upset occurs, the wise Federal Reserve chairman comes forward to reassure the citizenry: Not to worry, we are still living in the best of all possible worlds. Disregard the stock-market meltdown that destroyed trillions in putative savings; market adjustments of value are entirely normal to free-market capitalism and altogether unavoidable. Never mind Bush's budget deficits; these will be corrected through further tax reductions and privatization of federal functions like Social Security. Do not fret over the buildup of household debt, the stagnation of hourly wages, the absence of jobs for many unfortunate citizens; people should instead feel good about the economy. Productivity is improving robustly, so too corporate profits, which insures that everything will work out for the best.

Father Greenspan has been taking a victory lap these past few months, declaiming cheerfully on these and other matters, basking in the glow of his seventeen-year tenure. The President recently nominated Greenspan for another term as Fed chairman--his last, presumably--and the Senate's reconfirmation hearing will likely resemble Queen Victoria's Jubilee. Greenspan made himself the living embodiment of the conservative market orthodoxy that still reigns over conventional opinion, despite its spectacular failures. He preaches it, he governs by it, he explains away the many contradictions. Not surprisingly, the monied interests of Wall Street and corporate America like it like that. So do the major news media who, true believers themselves, see nothing to question in Greenspan's monetary policy. In the face of this establishment unanimity, even once-reliable critics like organized labor have lost their voice.

But all is not quite as Greenspan would have us believe, and someday hence, when a bold young scholar sets out to write a revisionist history of the Greenspan era, she will find an abundance of good material. He triggered two recessions, both by accident if one believes his public testimony. He passively observed the runaway inflation of stock-market prices and refused to do anything to avert the eventual collapse. He engineered legality for the new megabanks like Citigroup and JPMorgan Chase, both of which became festivals of megabanking fraud. The central indictment, however, will involve the many ways Greenspan's hard-money policy unbalanced the economy by favoring financial interests over the real economy of work and wages. For most of his tenure, in pursuit of reducing inflation further, Greenspan held back economic growth in order to maintain an artificial surplus of labor--higher unemployment that guaranteed that wages would stagnate to the benefit of profits and financial returns. It worked, of course, but far too well. Greenspan drove the price indicators down to zero and didn't know when to stop. He pushed the economy into the danger zone of deflation--falling prices, inadequate demand, imperiled debtors--and reversed course much too late to avoid various disasters. The economy is still struggling with the consequences of his monumental error.

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