Under Bill Clinton, unemployment dropped to a very low rate – 4%. Rightwingers and the business class, especially Wall Street, started screaming all across the land that inflation was coming. You see this insane system called capitalism is partly based on the insipid notion of a “natural level of unemployment.” In other words, capitalists oppose full employment with every fiber of their body. The more unemployment, the better for the capitalist, because unemployment “disciplines the laboring classes.”
When unemployment gets “too low” workers no longer fear losing their jobs, so they start to get bold about demands for raises, more money, better working conditions, etc. But with the huge “reserve army of labor” that the capitalists demand, the worker knows that if he quits his job, there are seven men itching to take his position. He is so terrified of losing his job that he is scrared to ask for a raise or better conditions. If he does, the boss will say, “Fine if you don’t like it here, go work somewhere else. I see seven men waiting for your job right now.”
Greenspan listened to the screams of the greedhead capitalists that “inflation was coming” because unemployment was “too low.” Doesn’t that sound stupid right there. How can unemployment possibly be “too low.” What sort of a lunatic system freaks out when too many people have jobs!? It is called capitalism.
Anyway, Greenspan slowly began raising interest rates to slow down the economy. Every time he raised rates, businesses fired or laid off more and more workers. So Greenspan deliberately slowed down the whole economy and threw 100,000′s of workers out of work all because “too many Americans had jobs.” Eventually unemployment was raised high enough that the workers were cowed and threat of dread inflation waned. So the rich and the US business class flipped out because they were afraid that all across the USA, a lot of workers might just be getting a raise. Well we can’t have that!