Alan Greenspan, the Federal Reserve chair who used markets faith and carefully chosen words to guide the economy through the dot-com boom, has died at 100; his successor now faces a similar choice as AI valuations rise.

What happened

Alan Greenspan, who led the Federal Reserve for 18 years and died Monday at age 100 from complications of Parkinson's, became famous for keeping interest rates low during the 1990s internet boom despite rising inflation, betting that productivity gains from new technology justified higher asset prices. His 1996 phrase 'irrational exuberance' became iconic for flagging speculation, yet he did not try to stop it with rate hikes, believing the cure would damage the broader economy.

What to watch

The core tension Greenspan never resolved: whether central banks can safely let asset bubbles inflate without risking catastrophic damage when they pop. Warsh must decide whether to lean against the AI boom's valuations or allow it to run, knowing that Greenspan's faith in markets to self-correct was contradicted by the 2008 financial crisis.