Greenspan wouldn't play. His decision infuriated Republicans. But it also got a group of conservative economists noodling the idea of emasculating the Fed, removing much of the discretion that makes the institution both powerful and dangerous. The leading advocate of this approach was a Stanford economics whiz named John Taylor, whom George W. Bush appointed to Treasury this month. The best Fed policy, his study showed, was to respond by jacking interest rates.
Higher rates mean it's more expensive to borrow, and that slows the economy down, tamping inflation.
Under Taylor rules, anyone, even Bernie, could make monetary policy. In our globalized economy, the thinking went, everyone from China to Chile could have a Greenspan. All they needed was access to the right ratio and a laptop computer to crunch the numbers. Some say he may be to Bush what supply-sider Arthur Laffer was to Reagan. One key meeting to watch is the weekly get-together between Greenspan and Treasury chief Paul O'Neill.