Even as Mr. Greenspan skillfully managed interest rates in a way that kept the economy humming along, he remained leery of confronting a danger he well recognized: that the low-inflation, easy-money environment he had helped create was putting the United States at risk by fueling unsustainable investment booms. And he remained reluctant to act as banks and investment firms adopted complex new trading techniques that would come to wreak great damage. At the Fed, he was remarkably successful at what he considered the central banker’s primary task of holding down inflation. He also helped the United States deal with periodic shocks, including a stock market crash just weeks after he took office, the near-meltdown of Asian financial markets a decade later and the aftereffects of the 2001 terrorist attacks....
From my blog archive:
October 23, 2008
And there was a time when I was reading Greenspan's autobiography:
Meanwhile, Alan Greenspan's book "The Age of Turbulence" lavishes praise on Bill Clinton for his intellect (especially for his grasp of economics and his perception of how things would change in the future). Greenspan classes Bill Clinton with the smartest of all the Presidents he has known: Richard Nixon. Which brings us back to the point that "smartest" doesn't encapsulate what you really want in a President.
And there was a time when Alan Greenspan was reading Ayn Rand:
"'Atlas Shrugged' is a celebration of life and happiness."
"Justice is unrelenting. Creative individuals and undeviating purpose and rationality achieve joy and fulfillment. Parasites who persistently avoid either purpose or reason perish as they should."So wrote Alan Greenspan in a letter to the editor of the NYT in 1957, the year the book was published and denounced by the newspaper as "written out of hate."
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Married to the Media. Just like the Congresscritter who married a Fox News reporter over the weekend. And they wonder why Americans dismiss Swamp Creatures as their own elite group. A group not to be trusted.
"If I've made myself too clear, you must have misunderstood me." ~ Alan Greenspan
A devoted follower of libertarian icon Ayn Rand, Alan Greenspan favored laissez-faire regulation instead of setting boundaries for financial instruments such as derivates.
Eventually he admitted in a congressional hearing: “I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms.”
Message received: social democracy is a problem and a little equality always goes too far. Free markets, not free peoples, is the beneficial regulator.
Did he collect on his Smuckers jelly jar and mention by Willard Scott?
I guess Althouse is Willard Scott now, but for famous people.
Booms and busts have been part of the respiratory rhythm of capitalism since the beginning. We had a significant bust, but it never turned into a Great Depression. He did the right thing during that micro-bust in 87. All in all a successful life.......Both Fauci and Greenspan were asked to play the role of Gandalf in their respective fields. Neither man was Gandalf, but Greenspan hit his mark and said his lines with greater success than Fauci.
And a brilliant jazz musician. Greenspan was trumpeter that played professionally as a young man.
Let us at this time take a moment to pause and reflect on the fact that no collective farm ever went bankrupt. No one ate but no one went bankrupt. Look at all those people at Lehman Bros who lost their jobs and vow never again.
If you simply print more money it turns out there’s a universal American consensus left and right that in the long run we’re all dead.
I remember a large financial company that went all in on illiquid investments in 2008, just before the bubble burst. The CEO argued afterwards that he did long not believe in such investments, but in the end was convinced about the Greenspan put.
Greenspan never failed to deliver disappointments, be it his adulation of Ayn Rand, or his socialization of losses of banks.
Rand was a philosophical poisoner, who as a Russian escapee of Communism was given far too much credence despite no lived experience which supported her ideas. Lived on benefits, dined out on tales of free markets.
Greenspan underestimated the corruption in DC. The 2008 crisis was primarily the result of Fannie and Freddie, and Congress critters like Barney Frank, who incentivized banks to make subprime loans to millions of people who had no business borrowing. The private sector (banks and AIG) got in on the game to be sure, but it was corrupt players in Washington DC that got the whole thing going.
I can’t imagine any of his successors having the courage to admit error. He was a great listen, if only an ‘just okay’ Fed chair. Forever tied to the now accepted Briefcase Indicator. Because he believed signaling blunted the effectiveness of the Fed’s tools, pundits were left to divine clues from available information, including the thickness of Greenspan’s briefcase. A fat one on rate day meant changes ahead while a skinny one means no change. After several years for Fed offering guidance the new chair is returning to Greenspan’s mum’s the word style…
He married Andrea Mitchell, NBC News, late in life. She was 20 years younger that Greenspan.
More and more people are living to be 100. What are we going to with them/us? Biden and Clinton are already mere husks of themselves in their 80s.
Clinton may have been a very smart guy, but he also knew how to massage the egos of everyone who talked to him and leave them thinking the world of him. Nixon was more abrasive and less personable, and therefore probably smarter -- for whatever that's worth.
Credit organizers with debt "benefits".
There was a time when Allan Greenspan was doing much more than "reading" Ayn Rand. For 10-20 years in the 60s-80s he was a very active member of her inner circle.
A true "True Believer"
John Henry
Just to be clear, I meant my comment above as praise. To the extent that Rand's economics influenced Greenspans, it is a very good thing IMHO
John Henry
I think that Greenspan’s culpability for vigorous opposition to greater regulation of financial sector practices is undeniable.
His tempered fondness for the positions peddled by Ayn Rand, which are the basis of modern Libertarian views in the US particularly among contemporary elites like Elon Musk and Peter Thiel, is rightly subject to criticism, in my view.
However, Greenspan should be given credit for endeavoring to assess what went wrong prior to the mortgage debt crises that precipitated the Global Financial Crisis of 2007 - 2009. He didn’t have to do so, although he clearly understood that his legacy was under the microscope, so to speak.
The reality is that booms and busts predated central banking and predated governments taking active roles in the economy, and have continued unabated with their introduction and attempts to prevent booms and busts. The business cycle is rooted in human behavior and will always be with us, and it is pointless blaming individuals for it.
Sure, there have always been booms and busts, but only governments and central banks have managed to create full-blown crises like the Great Depression and 2008. The panic of 1907, for example, was pretty serious, but J.P. Morgan (the man, not the bank) was able to take charge and resolve it with little government involvement, and the after-effects were minimal. Once crisis resolution and prevention were nationalized, governments and central banks generally made things much worse. The exception is 9/11, which I think the Fed handled deftly.
Modern libertarians aren’t libertarians.
Here’s a really funny — an absolutely true — story about Greenspan.
Forty plus years ago, I was on the “DC Shuttle” coming back from DCA to LGA. I don’t know whether the shuttle still exists. At the time, American Airlines offered a flight to/from DCA and LGA every hour on the hour. No reservations … just show up. Only one class of seats.
I’m sitting in an aisle seat on the right side of the airplane. Two rows ahead of me on the left-side across the aisle was Alan Greenspan. A very recognizable guy.
The plane took off, and everything settled down. Then, the guy who was sitting two rows ahead of me (directly across the aisle from Alan Greenspan), turns to Greenspan and says, “Excuse me sir, aren’t you Alan Greenspan?” Greenspan turned to him and said, “Well, yes I am.”
Then the guy turns back to Greenspan and says, “My name is Alan Greenspan too, and I’m getting damn sick and tired of being confused with you.”
The entire plane (all businessmen) erupted in laughter. You CANNOT make this up.
Rip Alan Greenspan.
One of the worst people ever. Too bad he didn't die sooner. Despite what "Muh, free market" types say, he was directly responsible for the Crash in 2008. He and others pushed for bank consolidation and "freeing them" to make risky investments and bad loans.
As for Bill Clinton, we now know Bush 41 loved him, and considered him almost as a son. And why? Clinton was a Bush Clone when it came to big business, globalism, open borders, and wars everywhere. Another member of the "Invade the world, invite the world" fan club.
And its crazy how many of our elite are managing to live to 100. 100 is the new 90.
Anytime you find that some one with power is a Ayn rand fan-boy - look out.
I was a big fan of Yeoman Rand back in the day, but I wouldn't trust Star Trek for economics ideas.
He raised interest rates in 1999-01 and 2004-2006 this would pop the tech bubble and ultimately the sub prime one
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