JOHN LAW WAS the original founder of the system of paper money that Greenspan now presides over. And there are notable similarities between the two men. Paper money was invented as a tool for the benefit of politicians, who wanted easy money for their various schemes. But both Orleans and Bush learned the hard way that the man in charge of the paper money has political power above and beyond even that of the politicians. Some speculate that the current decade-long expansion in stock prices Greenspan has presided over is a mania like Law's Mississippi Bubble.
Bubbles are easy to point at in hindsight, but hard to identify beforehand.
Whether we are in fact sailing smoothly through the narrow pass between inflation and recession with Greenspan masterfully at the helm, or dancing merrily on the fragile skin of a bubble, is anybody's guess. Law was just the first dramatic example of the dangers of hyperinflation the West has seen, but from Germany to Argentina excessive paper money has led to economic disaster. It is only because Greenspan has been so smooth in his control that we have been fortunate enough to forget the dangers, to the degree that no one talks about money supply anymore. Smoothness and control should not be surprising in a character like Greenspan. Even if dueling were still a cultural commonplace, you can bet a young Alan Greenspan would be more likely to walk away from an insult than avenge one.