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Alan Greenspan: Brief Bio, Policies, and Legacy

Photo: Alan Greenspan Photo: Alan Greenspan

Alan Greenspan: Brief Bio, Policies, and Legacy

American economist Alan Greenspan presided over the Federal Reserve’s Board of Governors from 1987 to 2006, serving as the country’s central bank. He also held the position of chair of the Federal Open Market group (FOMC), the Fed’s main group for formulating monetary policy and controlling the nation’s money supply.

Greenspan is most remembered for overseeing the Great Moderation, which spanned from the middle of the 1980s to the financial crisis in 2007 and was characterized by relatively stable inflation and macroeconomic development.

Childhood and Education

On March 6, 1926, Alan Greenspan was born in New York City. He studied economics at Columbia University in the early 1950s under Arthur Burns, who would later serve two consecutive terms as chair of the Fed’s Board of Governors. He earned his bachelor’s, master’s, and doctoral degrees in economics from New York University.

In 1948, Greenspan’s first position was working for a non-profit that studied the demand for steel, aluminum, and copper rather than the government. Following this, Greenspan operated Townsend-Greenspan & Co., Inc. in New York City from 1954 to 1974 and again from 1977 to 1987. When President Gerald Ford appointed him to lead the President’s Council of Economic Advisers (CEA), Greenspan began his career in the public sector.

Greenspan succeeded Paul Volcker as the Fed’s thirteenth chairman in 1987. Greenspan was first appointed to the position by President Ronald Reagan. Still, he served for four more terms under the administrations of three other presidents: George H.W. Bush, Bill Clinton, and George W. Bush. Ben Bernanke succeeded him after he retired in 2006 after serving as chair for over 18 years. After departing, he started his own consulting business, Greenspan Associates LLC, in Washington, DC, and released his autobiography, The Age of Turbulence.

In addition to serving during one of the most serious economic crises of the late 20th century, the aftermath of the 1987 stock market crash, Alan Greenspan was renowned for his skill at achieving agreement among Fed board members on policy problems. After that crisis, he argued for dramatically lowering interest rates to stop the economy from entering a deep slump.

Actions and Policies of Alan Greenspan

Supporters believe that Greenspan’s leadership of the Fed played a significant role in his ability to rule over one of the most affluent times in American history. However, several of his decisions and actions were debatable at the time or in hindsight.

Positions on Inflation

Early in his career, Greenspan gained a reputation as a hawk on inflation, partly due to his support for a return to the gold standard in monetary policy in the 1967 essay “Gold and Economic Freedom.”

Early detractors said that his purportedly “hawkish” posture preferred to sacrifice economic progress in return for deterring inflation. After taking over as Fed chairman, Greenspan later changed his mind. In a speech in 1998, he acknowledged that the new economy might not be as vulnerable to inflation as he had once believed.

Greenspan’s ostensibly hardline strategy was, to put it mildly, flexible. In contrast to his predecessor, Paul Volcker, he adopted a generally easy money policy, showing a willingness to take a risk on inflation under circumstances that could lead to a catastrophic downturn. Greenspan oversaw the reduction of interest rates to levels not seen in many decades, particularly in the early 2000s.

Change in Interest Rates

Greenspan argued for lowering interest rates after the dot-com boom broke in 2000. He repeated the action after the World Trade Center attack on September 11, 2001. After September 11, Greenspan oversaw the FOMC’s decision to immediately drop the Fed funds rate from 3.5% to 3%. In the following months, he pushed to get the rate down to a record-low (at the time) of 1.13% and maintain it there for a full year.

Some people protested the rate decreases because they thought they might cause asset price bubbles in the U.S. Although Greenspan and his followers contest this, it is now largely accepted that his pro-inflationary policies, particularly at this time, played a role in the U.S. housing bubble, the ensuing subprime mortgage financial crisis, and the Great Recession.

Promoting Adaptable-Rate Mortgage

In a 2004 speech, Greenspan advocated for more homeowners to consider obtaining adjustable-rate mortgages (ARMs), in which the interest rate automatically changes to the going market rate.

Interest rates subsequently increased while Greenspan was in office as inflation increased.

Due to this increase, many of those mortgages were reset to considerably higher payments, further aggravating the crisis and causing misery for many homeowners.

“Greenspan Put”

Under Greenspan, the “Greenspan put” was a monetary policy tactic that gained popularity in the 1990s and 2000s. Throughout his administration, he actively used the federal funds rate to aggressively decrease interest rates to combat the deflation of asset price bubbles and strengthen the U.S. economy.

Financial markets experienced significant moral hazard as a result of the Greenspan put. Investors with sufficient knowledge could anticipate the Fed’s predictable moves, which would distort market players’ incentives by covering investors’ losses.

Because Fed monetary policy tended to inherently restrict investors’ potential losses in the event of a market downturn, like purchasing put options on the open market, this produced an atmosphere where investors were incentivized to assume excessive risk.

How long was Alan Greenspan the head of the Federal Reserve?

From 1987 through 2006, Alan Greenspan presided over the Federal Reserve for five terms.

By whom was Alan Greenspan chosen?

In 1987, Alan Greenspan was selected by President Ronald Reagan to lead the Federal Reserve.

Who Took Alan Greenspan’s Place?

When Ben Bernanke was appointed Fed Chair in 2006, he succeeded Alan Greenspan. Bernanke held office until 2014.

When Was Alan Greenspan Born?

As of June 2023, Alan Greenspan will be 97, born on March 6, 1926.

Who Is the Wife of Alan Greenspan?

In 1997, journalists Andrea Mitchell and Alan Greenspan got hitched.

Currently, what is Alan Greenspan doing?

Greenspan has worked as an advisor since leaving the Fed through his business, Greenspan Associates LLC.

Who you question will determine if Alan Greenspan’s five terms as Chair of the Fed were successful, just like many other public servants. However, it is undeniable that during his tenure, Greenspan faced several extremely difficult obstacles, such as the 1987 stock market meltdown and the World Trade Center attacks.

Greenspan played a key role in the 1990s’ robust U.S. economy. The extent to which his activities contributed to the economic downturn that started soon after his term ended is a matter of debate.


  • American economist Alan Greenspan served as the Federal Reserve’s previous chairman.
  • The Great Moderation, or the sustained maintenance of low, stable inflation and economic growth, was the cornerstone of Greenspan’s economic strategy.
  • Greenspan’s expansionary “easy money” monetary policy is credited for contributing to the 2008 financial crisis and the 2000 dot-com bubble.
  • The historic 1987 stock market crisis presented a pressing challenge early in Greenspan’s tenure as chair.
  • Some people view Greenspan’s fears about inflation as hawkish. He was criticized for putting more of an emphasis on price control than on reaching full employment.

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