The Real Greenspan Lesson for Warsh on Inflation | RealClearPolitics
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by Jason Furman, Financial TimesFebruary 14, 2026
AI-Generated Deep Dive Summary
Those advocating for the Federal Reserve to cut interest rates should reconsider their stance by examining the historical relationship between price trends and productivity growth, as highlighted by former Fed Chairman Alan Greenspan. The article emphasizes that inflationary pressures are not solely determined by interest rate policies but are deeply intertwined with broader economic factors, particularly productivity gains. This perspective underscores the importance of understanding how shifts in productivity can influence pricing dynamics, offering a more nuanced view of inflation management.
The piece draws lessons from Greenspan's tenure, where he often prioritized productivity growth over short-term inflation fixes. By focusing on long-term structural improvements in the economy, such as technological advancements and efficiency gains, Greenspan believed that sustained productivity could help control inflation without过度reliance on interest rate adjustments. This approach suggests that merely cutting rates may not address underlying economic imbalances and could potentially fuel inflation if productivity does not keep pace.
From a political standpoint, this matters because decisions on monetary policy have significant implications for employment, consumer behavior, and overall economic stability. Critics calling for rate cuts argue that lower borrowing costs could stimulate spending and investment, but without corresponding increases in productivity, such measures might lead to transient economic boosts rather than sustainable growth. This debate highlights the delicate balance policymakers face between addressing immediate economic
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Originally published on RealClearPolitics on 2/14/2026