Innovational progress sans thrift

Federal Reserve Chairman Alan Greenspan seemed to succumb partially to the irrational exuberance that underlay the U.S. 1995-2000 Wall Street bubble: a specified step-up in total-factor productivity la Schumpeter, centered in the high technology sector, was believed to accelerate long-term real GDP growth and equities' future total returns. Even without positive U.S. thrift, by 2020 when babyboomers' retirements exploded as a demographic revolution, technological progress could allegedly atone for the worsening of thrift traceable to the massive Bush tax cuts that had earlier received Greenspan's blessing. Here I spell out a 1912 Schumpeter scenario of "Progress sans Thrift" and show how it is unlikely to fulfill high-profit growth hopes of bubble speculators. (C) 2002 Elsevier Science B.V. All rights reserved.