I have great difficulty in believing Greenspan is anything other than the world's best paid charlatan.
For starters there is no great mystery surrounding the origin of the "credit tsunami." It was an entirely predictable consequence of a) deregulation and lack of oversight of financial markets and b) the keeping of interest rates well below the level of inflation, which predictably enough resulted in c) the money supply expanding exponentially faster than the real economy. Those hallucinated riches were bound to turn to ashes as sooner or later.
Aside from the complexities of the "innovative" credit markets, the job of the Fed, like any central bank, should be to stabilise the economy by raising rates to prevent economic overheating, and cutting rates to prevent recessions turning into slumps.
Unpleasant a systemic feature as it may be, recessions are a necessary evil to prevent bull markets getting carried away by their own momentum into economic lala-land, which is where the economy has been since 2001, a year in which Greenspan cut rates from
6.5% to 1.75%. He carried on cutting until the 1% nadir of 2003.
Greenspan cut far more than was necessary, not merely lessening the impact of what would have been a normal enough downturn, but catapulting the global economy into an unprecedented credit bubble, or credit tsunami if you like. The only question then, is why?
I believe that Greenspan's loose monetary policy was a consequence of political pressure, in particular pressure to keep the economy booming, and the credit flowing fast and loose so Bush could finance his adventures in Afghanistan and Iraq. Notice that since the credit crunch, the talk of war with Iran has almost vanished.
Also, the expansion in bubble-industry jobs - i.e. in housing and related industries, disguised the job losses from off-shoring, creating the illusion of transition from manufacturing economy to service economy.
