It's official. President Clinton and Fed Chairman Alan Greenspan both declared over the past month that technology has changed the fundamentals of how the American economy works. In essence, productivity is rising so fast that old notions about how fast the economy could grow have been tossed out the window.

Clinton, with all the wonder of Dorothy just back from a visit to Oz, told Business Week last week: "I do believe in the New Economy." And the normally poker-faced Greenspan enthused in congressional testimony June 17: "An impressive proliferation of new technologies is inducing major shifts in the underlying structure of the American economy."

Here in Silicon Valley, ground zero of the New Economy, it's clear that this dizzying process of change is just beginning. What lies ahead is an acceleration of the virtuous cycle we've been experiencing -- in which technology has made workers more productive, fattened corporate profits and allowed a level of sustained economic growth unlike anything we've seen since World War II.

"Productivity gains in industry have only begun," says Donald Listwin, executive vice president of Cisco Systems, the company that is literally wiring up the world for the Internet. He predicts that as American companies become true electronic businesses, sharing information with customers and suppliers up and down the line, the productivity impact "is going to be 10 times what we're seeing today."

Listwin is sitting in a tiny windowless office -- for all its new wealth, Cisco still dislikes perks so much that even the top brass get lousy offices and fly coach. He pulls a visitor up to his computer terminal and explains how the next phase of the great transition will work, as other companies follow Cisco into what Listwin calls "the Internet ecosystem."

Listwin brings up his "Executive Dashboard," which gives top managers an instant look at every aspect of Cisco's business, which logged $8.5 billion in sales in the last fiscal year.

"Let's buy something," he says. He goes to a screen that records capital spending proposals. A request to buy $188,000 worth of Sun computers is awaiting his approval. He types a few keystrokes and -- bing! -- the order is made. The entire process took about 10 seconds. Interestingly, the purchase order will be executed by an outside firm called Ariba, which negotiates the best price with vendors such as Sun. Cisco itself doesn't have a purchasing department!

"Let's see what we're selling," continues Listwin. He calls up a screen called "Cisco Worldwide Reporting." "Yesterday, we sold $51 million worth of stuff," he says. That "stuff" is mostly the complex routers and switches that move packets of information around the Internet -- a market where Cisco has a roughly 80 percent share. Nearly all the customers make their purchases online, through Cisco's Web site. Listwin shows me that day's top 10 customers, then focuses down to what the company sold that day in Asia -- specifically in China, specifically to telephone companies. It's all there.

"Let's see where we're having problems," says Listwin. He moves to a screen called "Critical Accounts." Any customer can put itself on this watch list and get instant, daily attention from top management.

This is what an electronic business looks like. Its supply chains and sales operations are all integrated electronically -- providing opportunities for instant flexibility and responsiveness.

What is this productivity worth? Cisco reckons it saves at least $500 million annually in operating costs, by using networked systems. Cisco estimates its revenue per employee last year was $700,000, compared with $250,000 per head for the average Internet company and $160,000 for the automotive industry. But that gap, in a sense, is a measure of the continuing surge in productivity we can expect in our economy.

"Most companies have only started to understand the advantage of a fully connected workplace that empowers people to get things done," says Listwin.

It's heady stuff, the business revolution that is radiating off this hot, dry valley in Northern California. And it has enormous but hard to calculate implications for the Washington world of public policy. I called our new Treasury secretary, Larry Summers -- something of a technology buff himself in his pre-bureaucrat days -- and asked him to explain this "New Economy."

Thanks to technology, says Summers, "productivity growth appears to have accelerated in a way no one could have expected several years ago," making possible faster growth without inflation.

And can the virtuous cycle last? Here's Summers's answer: "I think the economy is healthy in the sense that a healthy person doesn't know what he'll die of. But that doesn't mean he'll be immortal. And we can't assume that current experience will last forever."

The biggest lesson from Silicon Valley, says Summers, tongue in bureaucratic cheek: "Only in America can you raise your first $100 million before you buy your first suit."