Ex-Federal Reserve chair Alan Greenspan dies aged 100

Alan Greenspan, hailed as the greatest Federal Reserve chairman when he retired in 2006 but only ridiculed by the severe financial crisis two years later, has died at the age of 100.

Greenspan, who had a strong influence on the US economy during his tenure as Fed chairman from August 1987 to January 2006, died at his home due to complications of Parkinson’s disease, NBC reported, citing his wife, Andrea Mitchell, the newspaper’s chief Washington correspondent.

Greenspan oversaw the second-longest economic expansion in U.S. history, a decade of uninterrupted growth from March 1991 to March 2001.

His decision to let the economy slide despite pressure to raise interest rates to counter the threat of inflation that never materialized helped boost U.S. prosperity for years to come and earned him rock star status as an economic “maestro.”

This period was marked by his prescient judgment that productivity growth in the mid-1990s would keep inflation in check.

His insight at that moment remains a cornerstone for policymakers and was cited by former Fed Chairman Jerome Powell as an example of how judgment can sometimes outperform technical models of the economy.

But the onetime jazz musician’s monetary policy acumen later came into question as critics attacked his policies that fueled a series of asset price bubbles and set the stage for the 2007-2009 financial crisis.

“I don’t think the apotheosis that came right before the financial crisis was ever really deserved, and I don’t think the scolding he received after he left was never fully deserved either,” said former senior Fed official Stephen Oliner.

Greenspan, who fell in love with mathematics because of his passion for baseball statistics, quickly won praise for his strong response to the Black Monday stock market crash of 1987, just two months after taking office.

He also guided the U.S. economy through the 1990-91 recession, the 1997-1998 Asian and Russian financial pandemic, the collapse of the dot-com stock bubble in 2000, and the turbulent economic period following the September 11, 2001 attacks.

Biographer Sebastian Mallaby detailed that along the way he became a consummate Washington power player, able to maneuver presidents and cabinet secretaries into making what he thought were the best decisions, sometimes without realizing who was pulling the strings.

At the Fed’s vaunted Jackson Hole meeting in 2005, two leading economists declared him perhaps the greatest central banker of all time.

But when the house price bubble that had grown during his final four years in office finally burst, it damaged his once excellent reputation and the global economy.

Whatever Greenspan’s current merits, his successors have consistently pushed the Fed in a new direction; He introduced financial crisis response tools Greenspan had never encountered before, such as zero interest rates, and moved from opaque communications to more frequent speeches, a set inflation target and regular press conferences.

In addition to criticism of his monetary policy, critics have also criticized Greenspan, a strong advocate of light regulation of financial markets, for his interventionist stance that has allowed banks to place disastrous bets on the housing market.

Greenspan later admitted that he was “shocked” in his assumption that bankers’ self-interest would deter them from taking actions that would jeopardize the existence of their institutions.

“Those of us, myself included, who look to the self-interest of lenders to protect shareholders’ equity are in a state of shocked disbelief,” he told the House Committee on Oversight and Government Reform in 2008.

But the apologies in Washington fell far short of what his fiercest critics were seeking.

Some economists felt that the president, who has never hidden that he was a Republican, had undermined his political independence by supporting tax cuts proposed by President George W. Bush in 2001; but he also worked closely with Democratic president Bill Clinton.

Greenspan, the second longest-serving Fed chairman after William McChesney Martin, was first appointed by president Ronald Reagan in 1987 and later reappointed by presidents George HW Bush, Bill Clinton and George W Bush.

He was 80 when he left the Fed in 2006, but he moved seamlessly into a new career as a consultant and advisor at his own firm, Greenspan Associates, offering insights into where he thought the economy was heading in exchange for big fees.

Greenspan built on the successes of his predecessor, Paul Volcker, whose years at the Fed were marked by the rampant inflation of the late 1970s and early 1980s.

Indeed, Greenspan spent more time in his last few years at the central bank worrying more about the risks of deflation taking hold than about the reemergence of high inflation.

The 10-year expansion in the 1990s was fueled in part by a massive stock rally in 1996 that Greenspan suggested may reflect “irrational exuberance.”

He later walked back that comment, saying it wasn’t his job to second-guess investors.

Greenspan was often cited as the second most powerful person in the country after the president because of his ability to influence the economy through changes in the central bank’s short-term interest rates.

Pensive, serious and quiet, he expressed his views in short statements and speeches that were endlessly scrutinized by experts.

He once warned a group of economists that he spent too much of his time worrying about being too open.

“What I learned at the Fed is a new language called ‘Fed talk.’ We learn to mumble with great inconsistency,” he said.

He was so convoluted that his wife, Andrea Mitchell, said she “didn’t understand” the first few times he proposed.

The couple were together for 12 years before marrying in April 1997. This was both their second marriage.

Greenspan said he does his best thinking in the tub, sometimes enjoying baths that last up to two hours while reading reports and writing speeches and public statements.

Born in New York on March 6, 1926, Greenspan was the only child of Rose and Herbert Greenspan.

His parents divorced when he was young, and he grew up with his mother and grandparents in a small apartment in the Washington Heights area of ​​New York.

Greenspan’s first love was music, and he spent two years studying clarinet at the Juilliard School in New York.

He toured briefly with a swing band as a saxophonist before moving on to study economics at New York University.

In his youth, Greenspan was a friend and associate of novelist Ayn Rand, who espoused the superiority of free markets and the profit motive in books such as Atlas Shrugged and The Fountainhead.

Before the Fed years, he chaired the Council of Economic Advisers under President Gerald Ford in the 1970s. Also Townsend-Greenspan and Co. He also managed an economic consultancy firm called for years.

When Greenspan replaced Volcker, some worried he might not live up to his tough-minded, cigar-chomping predecessor.

But Greenspan quickly proved his mettle by pumping liquidity into financial markets to calm the stock crash of October 1987.

His swift action, now seen as a textbook example of how to deal with such crises, is credited with preventing a recession.

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