Though it's hard to imagine now, there was a time when the federal government was flush with a budget surplus, the economy was strong and stocks were on a sensational hot streak.

While the good times rolled, from time to time we would hear that Alan Greenspan, then-chairman of the Federal Reserve, had something to say. We would stop whatever we were doing and listen -- closely.

		"GREENSPAN'S BUBBLES: THE AGE OF IGNORANCE AT THE FEDERAL RESERVE" By William A. Fleckenstein with Frederick Sheehan McGraw-Hill ($21.95)

Greenspan was perhaps the second most powerful man in the world during his 18-year tenure from Aug. 11, 1987 to Jan. 31, 2006. The Fed chairman is authorized by Congress with the awesome power to print the money that makes the economy go around. His decisions affect interest rates, inflation and employment.

If he gets it right, the world is a better place. And the prosperity of the times would have indicated that Greenspan was worth his weight in gold.

But only a year after he left office, his legacy was smeared with the spectacular bursting of the housing bubble, which was pumped up entirely on his watch, but promises to hobble the nation's economy for some time.

The current housing and lending crises have put our financial system on such shaky ground that the recent failure of a single investment bank nearly unraveled it.

The man once hailed as the world's greatest economist is summarily dissected and discredited in excruciating detail in this study by William A. Fleckenstein with Frederick Sheehan.

Using transcripts from the Federal Open Markets Committee as well as congressional testimony, the authors make a strong case that Greenspan's easy money policies and long history of making bad decisions contributed to the wild IPOs and rampant over-investment, which yielded the tech bubble of the late 1990s.

They argue Greenspan lowered interest rates too much and held them low too long, thereby massively over-stimulating the financial markets.

To make matters worse, by bailing the economy out of the wreckage of the stock-market bubble, Greenspan's Fed actually created the real estate bubble and the credit crunch by systematically lowering rates all the way to 1 percent.

He also is criticized for not having stopped the shady practices in sub-prime lending. Banks and mortgage companies signed up millions of homebuyers, many with poor credit for sub-prime mortgages with complicated interest rate adjustments that have now led to a record number of defaults, a weakened economy and a stock market that has long lost its sizzle.

Since the book's publication in February, the current Fed chairman, Benjamin Bernake, has pulled a page from Greenspan's playbook by trying to solve the nation's economic woes with more of what got us in this predicament in the first place -- falling interest rates, Fleckenstein said in a recent interview.

"While that may take away some pain in the short-term, it absolutely guarantees more pain in the future," he said. "(Former Fed chairman) Paul Volcker is credited for the country's sensational growth in the 1980s because he raised rates at a time when it was very painful. But it was the right thing to do to set the stage for tremendous prosperity.

"Ben Bernake says don't go to the gym. Sit on the sofa and watch TV. Now we have a raging rate of inflation. ... As a result of the government bailing out Bear Stearns, we will be worse off for it. But I'm not sure how."

The prevailing theme throughout the 187 pages of "Greenspan's Bubbles" is this:

Whatever good that might have come out of Greenspan's nearly two-decade reign over the U.S. Central Bank has been dwarfed by the mammoth size of the problems it created.

"Greenspan's Bubbles" is a must-read for the powers that be who are seeking more insight on how to deal with the nation's growing financial crisis, whose proportions are still not completely understood.