If a government has a trillion dollars total and it sits in a bank and never leaves it, then there is no economy. If the trillion dollars are distributed among the populace by various means then it fuels growth and the flow of money goes to producers who in turn pay their workers and stockholders and the cycles continue, sometimes with it weighted more on one side, sometimes more on the other. When money is tight, interest rates too high, the government distributes more money. If it distributes too much you get inflation from the expanded money supply. When there is too much money in the economy causing price inflation the government raises taxes to slow the borrowing, increase the value of money so prices stop rising and to cool the economy a bit. You can also have a credit induced inflation where the money supply artificially expands
Right now there is too much money in the economy due to the Reserve's continual lowering of interest rates, fewer demands for dollars and interest rates are at all time lows which is good for the younger people still in the job market with a wage, but the older people are receiving less on their retirement investments which is now fueling a rise in Social Security and government supported health care needs at the present time. This is part of what's precipitating the latest Medicare bill on their behalf.
In my opinion, they need to tighten the money up a bit, have interest rates slowly increase about two points so that retirees could earn at least 5% on Certificates of Deposit. This would increase the burden on the working people, cause some price increases of products, but also relieve some of the burden on the elderly and their dwindling returns on their lifetime savings.
Greenspan unfortunately went thru the inflation years of the 70's and seems deathly afraid of it coming back and has gone too far the other way. People who have savings need a way to make a decent return on them and 3% per jumbo CD for 24 month commit is just not giving a decent enough return to retirees. When you realize this and then also realize that in an often desperate effort to find greater return on their money that retirees have made risky investments in the stock market at a time they may have decreasing intellectual acumen to deal with it, then you can see a problem growing for the future care of them when they lose those savings. This has happened already several times in the last decade. One thing seniors should never do is buy any stock on margin, but pay themselves for the whole stock so if the value drops they aren't forced into selling some stock at a discount to cover margin calls. Mutual funds are the most risky investment seniors should ever make with retirement funds.
Business growth isn't everything in an economy. If they can get money too cheaply and use it to expand too quickly, then those who should have received more funds from the lending of their money lose and the business will eventually lose when it has overgrown it's future diminished market. Unless the flow of money is kept fairly even things will slow down and stagnate. A business can switch from selling stock to help them over rough spots and instead borrow money. A decent return on savings is just as important as keeping price inflation in check. Greenspan needs to find a better balance that doesn't just take business needs into account since business is only one aspect of the overall economy.