Federal Reserve Chairman Alan Greenspan delivered an optimistic outlook on the economy Wednesday, saying that it "seems to have entered 2005 expanding at a reasonably good pace, with inflation and inflation expectations well anchored." He said there was a sense of confidence among investors as shown by a number of financial indicators.

Speaking before the Senate Banking Committee, the Fed chairman also urged for action on Social Security and Medicare before 2008, when the first of the Baby Boomers will begin to retire. However, he called for the transition to be done slowly and cautiously, with the transition costs in mind. "If you're going to move to private accounts, which I approve of, I think you have to do it in a cautious, gradual way," he said.

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