Tuesday, December 4, 2007

Week 4, post b

Alan Greenspan takes a whole chapter in his book to discuss what happened after the fall of the Berlin wall. He talks about the economic instability that followed the fall of the wall. When the wall fell the outside world took in the first images of life behind the iron curtain in Germany. Alan makes a big point about the economy which, at least for me, I hadn’t even thought about what the economy looked like after the fall of the wall. The USSR’s old economic system was one where the government set every aspect of the economy. With the fall of communism the free market spread into most of the of the satellites and was quickly adapted. It was interesting to read about what the countries did to shock there economy and help the free market rise. This however was a difficult thing to do in Russia because as Alan Greenspan put it "there was no one alive that had lived during the free market and no one knew what to do,". The Russia economy had troubles starting up. Another thing that I find interesting is when Alan talks about his new theory to stop inflation. His theory was stop inflation before it starts. He would tighten up the money supply before he thought that there would be inflation and this tactic lead to great American prosperity during the end of the 20th century.

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