From 1987 to 2006, the dollar lost 77.5% of its value under Greenspan's Fed, a stealth transfer critics liken to a bank robbery. The Fed's 2% target enshrines inflation.
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The dollar lost 77.5% of its purchasing power between 1987 and 2006, the years Alan Greenspan led the Federal Reserve. An item that cost $1.00 in 1987 cost $1.77 when he stepped down. The cumulative inflation was 77.5%, according to CPI data.
Greenspan's legacy is one of low inflation and stable growth, the conventional narrative says. The numbers tell a different story. The Fed's 2% inflation target, set behind closed doors in 1996 and made explicit in 2012, means the central bank deliberately erodes currency value. Greenspan himself understood this mechanism.
In a 1966 article titled "Gold and Economic Freedom," Greenspan argued that fiat money allows the government to spend without taxing. "As the supply of money increases relative to the supply of tangible assets in the economy, prices must eventually rise," he wrote. "Thus the earnings saved by the productive members of the society lose value in terms of goods."
The comparison to Willie Sutton, the bank robber who said he robbed banks "because that's where the money is," is not lost on critics. Sutton stole an estimated $2 million over 40 years. Greenspan's Fed, by contrast, transferred purchasing power from every dollar holder to the government through inflation. Sutton's victims were banks. Greenspan's victims were savers.
Moore's Law produced massive deflation in computers and peripherals from 1988 to 2006, the same period Greenspan ran the Fed. The tech industry prospered with falling prices. The Fed chose to fight deflation. Greenspan's own writing suggests he knew the consequences of fiat money.
Sutton died in 1980, having spent most of his life in prison. Greenspan died in 2023, celebrated as the "maestro" of the economy. The 77.5% inflation under Greenspan means a retiree who saved $100,000 in 1987 had the purchasing power of just $56,500 in 2006.
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