WASHINGTON
Former Fed chair Alan Greenspan, 100, died of complications from Parkinson’s disease, having become one of the key figures shaping financial history via policy decisions, free-market approach and decisive actions through crisis and prosperity.
Greenspan, widely known as the Fed’s legendary chair, was “a giant of a man who helped shape the US economy for decades under presidents of both parties, but was always honest in acknowledging his mistakes,” according to his wife, Andrea Mitchell.
He died Monday at his home, which was met with deep sorrow by the Fed, the bank reported.
Greenspan served as a Fed chair for five consecutive terms spanning four different US presidencies, becoming one of the longest-serving leaders in Fed history. He contributed to shaping modern capitalism during a period of the final years of the Cold War and the dawn of the digital age.
He left behind a massive economic legacy and a fame rivaling that of US presidents, though his legacy was overshadowed by the 2008 financial crisis.
Greenspan, born in 1926 in New York City, was the only child of his parents, who separated while he was very young.
He excelled at math at a young age, and he studied music at the prestigious Juilliard School, playing the saxophone and the clarinet in orchestras before pivoting to economics.
He completed his bachelor’s, master’s and doctoral degrees in economics at New York University. Before earning his doctorate, however, he studied economics at Columbia University in the early 1950s under Arthur Burns, who served as a Fed chair from 1970 to 1978.
Greenspan met Ayn Rand, author of Atlas Shrugged, and formed a close friendship. Rand, whose work influenced libertarians and conservatives with a philosophy deeply rooted in individual self-interest and free-market capitalism, shaped Greenspan’s approach to capitalism and his worldview.
Rand nicknamed Greenspan “the undertaker” due to his serious demeanor and habit of wearing dark suits.
Greenspan rose rapidly in the business world after beginning his career in 1948 at the Conference Board, a nonprofit where he made analyses of steel, aluminum, and copper demand. He later became a managing partner at the New York-based consultancy firm Townsend-Greenspan & Co., serving as president from 1954 to 1974 and again from 1977 to 1987.
Greenspan showed his analytical genius through his successful recession and inventory forecasts for major firms. He took his first step into politics in 1967, appointed as an advisor to former President Richard Nixon’s election campaign — he served as chair of the Council of Economic Advisers during former President Gerald Ford’s administration from 1974 to 1977.
He also chaired the National Commission on Social Security Reform, which came to be known as the Greenspan Commission Report, in 1981 – 1983. Greenspan served on former President Ronald Reagan’s Economic Policy Advisory Council and acted as a consultant to the Congressional Budget Office.
Having been tapped by Reagan to succeed Paul Volcker as Fed chair, Greenspan assumed the role Aug. 11, 1987. Following Volcker’s success in curbing double-digit inflation in the early 1980s, Greenspan inherited a 4% inflation rate and succeeded in bringing it to 2% during his tenure by the end of the 1990s.
Two months into Greenspan’s tenure, however, the US stock market saw the infamous Black Monday on Oct. 19, 1987, when it lost more than 22% of its value. Greenspan protected the economy from recession by keeping the markets liquid and restoring confidence in global markets.
During a transformative period amid accelerating globalization and the rise of the internet, Greenspan led one of the longest economic expansions in American history from 1991 to 2001.
His resistance to pressure to hike rates in the mid-1990s cemented his reputation as a monetary policy genius as he based his prediction on the productivity boom driven by information technology, which he thought would support growth without fueling inflation.
Greenspan appeared on the cover of Time magazine in 1990 after helping quell the financial crises in Asia and Russia. He also navigated the global economy through the dot-com bubble and the terror attacks of Sept. 11, 2001.
He kept markets and politician on their toes with his unique, difficult-to-understand speaking style marked with a convoluted expression he developed during congressional hearings. He became one of the most recognizable icons in global finance as he guided markets with his cryptic yet effective statements.
The Economist dubbed him a rock star, while his admirers dubbed him a maestro, as he came up with his best ideas while reading reports and drafting speeches during morning baths, which sometimes lasted up to two hours.
Greenspan spearheaded structural reforms like making the previously undisclosed processes at the central bank more transparent. He also made it so that rate decisions were accompanied by statements, while meeting minutes were set to be shared after a five-year delay during his tenure.
His tenure of 18 and a half years ended Jan. 31, 2006, as Greenspan became the second longest-serving Fed chair after William McChesney Martin.
Nobel laureate economist Milton Friedman described Greenspan’s tenure as the most successful central banking performance ever.
Greenspan’s unshakable belief that markets could effectively regulate themselves and manage risks was called into question during the 2008 financial crisis, erupting two years after his retirement. Critics and committees accused him of failing to recognize the housing market bubble in the early 200s, failing to curb the trading of securities backed by high-risk mortgage loans, and advocating for lax regulations in the financial sector eroding safeguards.
Greenspan said in October 2008, during a congressional hearing, that the crisis had turned out to be much more extensive than he believed, admitting to erring by relying on the self-interest of lending institutions.
He also said in a later interview that he was praised and blamed for things he did not do, but nevertheless, he secured a place in history as a powerful bureaucrat, having shaped modern American capitalism via analytical discipline, his ability to preserve and strengthen the Fed’s independence, his economic foresight and the long periods of stability he brought.
Greenspan founded the Washington-based consultancy Greenspan Associates after leaving the Fed Board and chronicled his memoirs in The Age of Turbulence, published in 2007.
*Writing by Emir Yildirim in Istanbul
