It wasn't the fact he got to interest rates down to that level it's the fact he left them there far to long. See when we have these cyclical downturns, it's always prudent to keep a low interest rate while the economy is slowing. But once it heals most reserve banks are so afraid of crushing a fragile economy that they leave interest rates to low for far to long.
In late 2002 and early 2003, for example, core PCE measurements were indicating inflation rates that were crossing below one percent. At the time, the economy was expanding in fits and starts. Given the incidence of negative shocks during 2002-3, the Federal reserve was worried about the economy's ability to withstand another one. Determined to get growth going in this potentially deflationary environment, the FOMC adopted an easy policy and promised to keep rates low. A couple of years later, however, after the inflation numbers had undergone a few revisions, we learned that inflation had actually been a half point higher than first thought.
In retrospect, the real fed funds rate turned out to be lower than what was appropriate at the time and was held lower longer that it should have been. In this case, poor policy action amplified speculative activity in the housing and other markets.
So in reality the rate was a indirect event rather than a causal effect with duration being the main driver. If Greenspan and his counterparts had been a bit more proactive they would have prevented this crisis we have now with asset bubbles.
