The U.S. and most other developed countries followed Keynesian economic prescriptions in the 1950s, 1960s and 1970s. However, it was increasingly apparent by the 1970s that the Keynesian model was not working in that "stagflation" had developed (i.e., a stagnant economy and high inflation). Two giants of the economics profession, Nobel Laureates Milton Friedman and F.A. Hayek, and their followers had long been critics of Keynesian economics, and their forecasts had come true. Professor Robert Mundell of Columbia University, who also won the Nobel prize, and his associate Professor Arthur Laffer of Chicago (following in Friedman's and Hayek's footsteps) argued that the solution was to reduce high marginal tax rates on work, saving and investment to revive economic growth and, at the same time, reduce the growth of the money supply to reduce inflation.

This was precisely what was done in the early 1980s, and it worked better than expected. Mr. Reagan brought in a world-class team of economists, including the late Norman Ture as undersecretary of the Treasury for tax. Paul Volcker (originally appointed by Jimmy Carter) and, subsequently, Alan Greenspan at the Fed carried out the new monetary policy.

- Richard Rahn in Revival of the tax hikers.

[Written in 2002] Alan Greenspan will be remembered as The Father of The Greatest Bubble in our nation's economic and financial history. To say that Fed policies under his tenure were reckless and irresponsible would be too kind. Greenspan became the chief finger-pointer of the "new era' mantra. In point of fact, it was his policies that created the greatest credit bubble of any nation in the history of the world. Greenspan became the incarnation of the 20th century equivalent of John Law, the Scottish banker and father of central banking that set France on its path to revolution. Alan Greenspan also became a defender of the expanding role of derivatives in the financial markets wanting them to remain unregulated. His response was reactive rather than proactive to any derivative crisis. He preferred to use the Fed as lender of last resort through its response policies. It didn't matter whether it was the peso crisis, LTCM, Russia, Y2K, or 9-11. The response was always the same: flood the markets with cheap money and ample liquidity and in the process, reinforce the "moral hazard." The result is we got more of what we were trying to avoid, as the 90's were a period in which one financial crisis followed another. - Read more in - Bubble Troubles - Part II by James J. Puplava.