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Alan Greenspan’s Legacy On Inflation And Trade

Former Federal Reserve Chairman Alan Greenspan died Monday at age 100, leaving quite an impression on monetary policy.

Howard Richman, Jesse Richman | June 24, 2026

Former Federal Reserve Chairman Alan Greenspan died Monday at age 100. He served more than 18 years (from August 1987 to January 2006) as Fed Reserve chair. He was renominated again and again by one president after another, partly because he was doing such a good job of keeping both inflation and unemployment low.

Brilliance on Inflation and Unemployment

In his memoirs, Greenspan partly attributed his success and that of his predecessor Paul Volcker to having implemented the advice of Milton Friedman, founder of the “Monetarist” school of economics. He wrote:

The money supply, then measured by a statistic called M1, consists mostly of currency in circulation and demand deposits, such as checking accounts. When money expands faster than the totality of goods and services produced – in other words, when too many dollars chase too few goods – everybody’s money tends to be worth less, that is, prices rise. The Fed could indirectly control the money supply by controlling the monetary base, mainly currency and bank reserves. Monetarists like the legendary Milton Friedman had long argued that until you contained the money supply, you hadn’t tamed inflation. [p. 85]

The money supply, then measured by a statistic called M1, consists mostly of currency in circulation and demand deposits, such as checking accounts. When money expands faster than the totality of goods and services produced – in other words, when too many dollars chase too few goods – everybody’s money tends to be worth less, that is, prices rise. The Fed could indirectly control the money supply by controlling the monetary base, mainly currency and bank reserves. Monetarists like the legendary Milton Friedman had long argued that until you contained the money supply, you hadn’t tamed inflation. [p. 85]

During Volcker’s term, slowing the growth in money supply led to high interest-rate shock-therapy which brought unemployment up to 10.8% in 1982 while bringing inflation down from its peak at 14.8% in March 1980........

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