10
Loading video...
By Hugh Cameron
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Alan Greenspan, the influential economist who steered the Federal Reserve through nearly two decades of historic economic growth and turbulent global crises, has died at 100.
Greenspan passed away at his home on Monday following complications from Parkinson’s disease, according to a statement from his wife, NBC News journalist Andrea Mitchell. The couple had been married for 29 years.
“He was a giant of a man who helped shape the U.S. economy for decades under presidents of both parties, but was always honest in acknowledging his mistakes,” Mitchell said in a statement to NBC News. “To me he was my husband, who shaped my life from our very first date in 1984. He had ‘irrational exuberance’ for baseball, the Washington Commanders, tennis, golf and music, especially jazz.”
Read More on News
First appointed as Fed chairman by President Ronald Reagan in 1987, Greenspan held the post until his retirement in 2006. His tenure spanned four presidencies, transforming him into one of the most powerful and recognizable figures in global finance. Tributes and obituaries for the centenarian reflected this footprint, with the BBC describing him as the “architect of the modern American economy” and The Washington Post dubbing him the “most powerful central banker of modern times.”
...
A Legacy of Crisis Management
A staunch proponent of free-market economics, Greenspan’s tenure drew high praise throughout his career. Nobel laureate Milton Friedman famously described him as the central bank’s greatest chairman.
Greenspan’s leadership coincided with a lengthy period of economic expansion for the United States. He was widely credited with stabilizing global financial markets in the immediate aftermath of the 1987 Black Monday stock market crash, which occurred just months into his term, as well as following the September 11, 2001, terrorist attacks.
Despite a commitment to laissez-faire capitalism, Greenspan’s hands-on, activist approach to managing economic shocks redefined the modern Federal Reserve’s role in domestic economic affairs.
Greenspan’s career in Washington was bookended with admiration from Congress for his understanding of monetary economics.
“I am glad that the president picked you,” Joe Biden, then a junior senator for Delaware, said during Greenspan’s 1974 confirmation to become a member of President Richard Nixon’s Council of Economic Advisers. “If he picks a conservative, I want him to pick a straight one and a bright one.”
As Greenspan left the Fed in 2006, it was described by The American Interest as “the status of a near deity."
And the bipartisan reverence continues, with Kevin Hassett, director of President Donald Trump’s National Economic Council, calling him a “brilliant mind” in an interview on Monday morning.
“If you go back and look at the history of the American economy going back over the last 50 years, I think Greenspan’s judgement to leave the economy alone, and let the internet boom happen, and the productivity boom from internet happen… That judgement created an enormous amount of wealth and prosperity for our country,” he told CNBC’s Squawk Box.
...
Regulation and the Housing Bubble
However, Greenspan's legacy remains a subject of economic debate. He drew criticism for having a perceived light touch when it came to financial regulation, seen by some as creating the conditions necessary for the late 1990s dot-com bubble and the mid-2000's housing bubble, which preceded the 2008 financial crisis.
Greenspan, who called the banking and housing chaos a “once-in-a-century credit tsunami,” shouldered some of the blame for failing to foresee the crisis, telling a House Oversight Committee hearing in 2008 that he “made a mistake” in assuming the nation’s banks could be self-regulating. He called it “a flaw in the model...that defines how the world works.”
Greenspan also acknowledged, during a 2007 interview with CBS News’ 60 Minutes, that he was aware of the questionable lending practices that steered borrowers toward riskier, adjustable-rate mortgages.
"While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late,” he told correspondent Lesley Stahl. “I didn't really get it until very late in 2005 and 2006."
...
Political Friction
His monetary policy decisions also brought him into direct conflict with the White House. The central bank's reluctance to lower interest rates during an economic downturn ahead of the 1992 presidential election drew the ire of President George H.W. Bush, who blamed the chairman for his reelection loss.
“Alan Greenspan disappointed me. I reappointed him and he disappointed me in the way that they begrudgingly lowered the rates,” Bush told journalist David Frost in 1998. “I think if the interest rates had been lowered more dramatically, that I would have been reelected president."
...
An Enduring Economic Legacy
Detractors and acolytes alike agree that Greenspan’s influence over monetary policy and economic debate endures till this day.
His unique phrasing has permanently entered the global financial lexicon. The term "Greenspan put"—the investor belief that the central bank will always intervene to protect the stock market—remains a core concept on Wall Street.
Similarly, his 1996 warning against the "irrational exuberance" of the stock market—coined by Greenspan to describe the speculative enthusiasm that fueled massive equity gains in the late 1990s—has become a permanent part of the nation's economic vocabulary.
Contact Newsweek editors on this story: Tobias Meyjes and Anthony Murray.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines