The timing is difficult to ignore. In the same week that Alan Greenspan died at the age of 100, markets found themselves asking a question he spent much of his career trying to avoid: what exactly should a central bank do when confronted with a potential asset bubble?

And this question is no longer academic. US chip stocks have doubled again this year. Artificial-intelligence spending forecasts continue to expand. Investors are assigning trillion-dollar valuations to companies whose most optimistic projections still reside years in the future. Economists, traders and academics remain divided over whether this represents a genuine technological revolution, speculative excess or some combination of the two. Yet the debate itself feels oddly familiar.

That, perhaps, is the first irony.

Greenspan’s name is permanently attached to one of the most famous warnings in financial history. His 1996 question about “irrational exuberance” entered the market lexicon almost immediately. The phrase became shorthand for speculative excess, overvaluation and investor mania. Yet the chairman who coined it spent much of the following decade arguing that central banks should do very little about such behaviour.

Greenspan’s reasoning was straightforward enough. Policymakers could not reliably distinguish a bubble from a genuine transformation. Attempting to suppress one might inadvertently destroy the other. Better, he argued, to focus on inflation and employment while cleaning up the damage after a crash if one occurred.

It sounds reasonable. It also sounds considerably less convincing when viewed through the rear-view mirror.

During Greenspan’s tenure, the Federal Reserve presided over the........

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