Maestro — Chapter 7

1. 1. Greenspan warned President Clinton that without action on the deficit, the U.S. faced financial catastrophe after 1996.
2. 2. Greenspan urged a deficit reduction target of $140 billion by 1997, which was adopted by Clinton after Bentsen relayed the advice.
3. 3. Clinton's deficit reduction plan passed Congress with no Republican support, relying on Vice President Gore's tie-breaking vote in the Senate.
4. 4. Greenspan believed that reducing inflation expectations by catering to the bond market would reverse the income skewing of the 1980s.
5. 5. In May 1993, Greenspan confronted puzzling inflation data that contradicted economic models, likening it to Galileo's problem.
6. 6. The FOMC voted 10-2 to adopt an asymmetric directive tilting toward a rate increase, but Greenspan assured Clinton any move would be mild.
7. 7. Greenspan noticed that high-tech equipment orders surged 20% while productivity data showed a decline, leading him to suspect measurement errors.
8. 8. Greenspan advocated releasing FOMC transcripts after five years, believing transparency would increase the Fed's power and public focus on interest rates.