The writer is an FT contributing editor

In January of 2001, not yet a full week into the presidency of George W Bush, Alan Greenspan appeared before the Budget Committee of the US Senate. This was not part of the semi-annual event where the chair of the board of governors of the Federal Reserve reports to Congress on monetary policy. Rather, he was an expert, there to help with a problem. In 2001, the US was in danger of paying down its debt completely and accumulating a surplus. 

Greenspan was not in favour of a surplus. It would have to be invested in private financial assets, he pointed out, distorting capital markets and making it “exceptionally difficult to insulate the government’s investment decisions from political pressures”. Greenspan was explicitly against a sovereign wealth fund, but he needn’t have worried. Over the next two-and-a-half decades the federal government paid for tax cuts, a war, more tax cuts, another war, a stimulus, more tax cuts, another stimulus, and is now once again contemplating tax cuts.