The Greenspan Doctrine

The Greenspan Doctrine, named after former Federal Reserve Chair Alan Greenspan, refers to the principle that the Federal Reserve should focus on controlling inflation and maintaining financial stability, rather than actively managing economic growth or unemployment directly. In essence, it emphasizes allowing the economy to adjust naturally, intervening only when necessary to prevent severe instability. This approach suggests that a transparent and predictable monetary policy helps foster confidence in the economy, encouraging investment and growth without unnecessary interference. It balances the need for stability with the recognition that markets are capable of self-correction over time.