(FORTUNE Magazine) – This month the U.S. entered the longest economic expansion in history--a record that has stood since the groovy boom of the 1960s. It should be time to celebrate; instead, the specter of history prevents many from partying too hard. At the time of Woodstock, America seemed to be basking in wealth that would go on forever--until it crashed abruptly in 1970. There are certainly similarities between now and then. Consumer confidence thrived in the 1960s, and the country spent freely. The stock market was climbing, making equity valuations feel stretched. At its peak in November 1968, the S&P 500 had nearly doubled since the beginning of the decade. "Between 1967 and 1968, there was a great public enthusiasm for stocks," says Richard Hoey, chief economist at Dreyfus Corp. "And there was a lot of boisterousness and speculation." Sound familiar?

But that's where the likeness ends. Rising and unstable inflation, fueled by lavish spending for the Vietnam war and the Great Society programs, killed the boom of the '60s and derailed the stock market. In 1969 inflation averaged about 6%--and that was before the first oil shock sent prices even higher. Today inflation, hovering around 2.7%, isn't dead by any means but is kept in check by forces that weren't around 30 years ago. An open U.S. economy spurred by new technology keeps pressure on prices and wages. And as European and Japanese corporations restructure and get hip to the Internet, price competition will only toughen.

Business is driving this economy, not government, as was the case in the '60s. The government has done its part in the '90s by practicing fiscal discipline, which has kept interest rates low and encouraged corporate investment. That wasn't true at the end of the '60s, when policymakers had little maneuvering room to offset the economic downturn--budget deficits sagged under the weight of high defense spending and tax cuts. Today if the economy stumbled, the budget surplus would be a tool for getting the economy back on track.

Though tight fiscal policy has laid the foundation for our economic expansion, the Federal Reserve has been there to deftly steer it. Chairman Alan Greenspan's approach of striking out against inflation preemptively has worked well to head off price pressures before they take hold and to keep expectations of inflation low. Now that increasing prices may be creeping back in some areas of the economy, Greenspan is taking action, but ever so gently. His proactive approach to rate hikes is designed to avoid the mistakes made in the late '60s, when the Fed let inflation get out of control and tried to tame it by repeatedly jacking up rates.

Then there's the all-important difference: technology. "We could have the best monetary policy ever, but if we didn't have new technology, we wouldn't be able to raise our standard of living," says economist Paul Romer of Stanford's Graduate School of Business. It's true that technological innovation has been driving our economy for the past century, but there was nothing like the Internet revolution in the '60s to produce rapid change. "It's the most important concern in the economy, and there's no reason to expect it to slow down anytime soon, but we should still be thinking about how to sustain it for decades to come," says Romer. In fact, the pace of technological change is probably speeding up. Not only are our research institutions better set up today to foster new ideas, but our financial markets are making it far easier to finance them as well.

And Wall Street has fallen hard for Internet stocks. In just two years the Net-heavy Nasdaq has almost tripled. The S&P 500 is up an astronomical 333% this decade. Stocks like Amazon.com have soared without even turning a profit. It's a craze that could be compared to the Nifty Fifty fad in the early 1970s, when a group of well-known large-cap stocks became wildly popular. In 1972 a stock like Polaroid commanded a price worth 94 times earnings--five times the average ratio.

But any analogy would be misguided. As Al Goldman, chief market strategist at A.G. Edwards, points out, "The Nifty Fifty was an investment theme where the only real thesis was growth. The Internet boom is based on an economic phenomenon. It will change the way we live our lives." What's more, Internet stocks aren't the only ones rallying today. Low inflation, good policy, and rapid technological innovation provide a firm foundation for this stock market, even if valuations are high. This also means that if the Net stocks crash and burn, they won't necessarily take the rest of the equity markets with them.

The economy aside, society was much more unsettled in the '60s. The Vietnam war split the country in half in 1970--the year in which the National Guard killed four antiwar demonstrators at Kent State. Race relations through the '60s and early '70s were equally charged, with riots breaking out from California to Detroit. And the country had also suffered from a series of shocking assassinations, including those of John F. Kennedy, Martin Luther King Jr., and Robert F. Kennedy.

No wonder the economic boom felt more like a backdrop to the social and political drama. Today the violent protests at the World Trade Organization conference in Seattle last fall seem like an anachronism; the cultures of Silicon Valley and Wall Street are pervasive, and they're all about money--and making more of it. As Peter Rutkoff, a social historian at Kenyon College in Ohio, puts it, "In the '60s, people were more concerned about the poor and racial issues. Today those things don't seem to matter. It's like the country is too rich to care." Or maybe just too busy growing the economy.

REPORTER ASSOCIATE Noshua Watson