Alan Greenspan

• 1. Introduction

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  Alan Greenspan stood before the United States Senate in February 1997 and told the assembled lawmakers that growing worker insecurity was, in his view, a significant factor keeping inflation low. The man who said that was not a minor bureaucrat. He was the 13th chairman of the Federal Reserve, the most powerful economic position in the world, and he had been holding it since 1987. What draws listeners to Greenspan's story is not simply his longevity in office. It is the contradiction at his core: a devoted follower of Ayn Rand's philosophy of individual freedom who spent nearly two decades steering a vast central bank; a man whose public statements moved markets worldwide; a figure once compared to a rock star by commentators who later called him a contributor to the worst financial catastrophe since World War II. How did a clarinet-playing teenager from Washington Heights become the most scrutinized economist on earth? And what does his long tenure tell us about the limits of ideology when it meets the messy reality of markets?

• 2. The Washington Heights Kid

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  On the 6th of March 1926, Greenspan was born in the Washington Heights neighborhood of New York City. His father, Herbert Greenspan, was of Romanian Jewish descent; his mother, Rose Goldsmith, traced her roots to Hungary. His parents divorced, and he grew up in the household of his maternal grandparents, who had been born in Russia. At George Washington High School, where he graduated in June 1943, one of his classmates was John Kemeny. He played clarinet and saxophone alongside Stan Getz. He then studied clarinet at the Juilliard School from 1943 to 1944, and his bandmates in the Woody Herman band included Leonard Garment, who would later serve as Richard Nixon's special counsel. The military rejected him in 1944 as medically unfit because of a spot on his lung. He enrolled at New York University's Stern School of Business in 1945, earning a B.A. in economics summa cum laude in 1948 and an M.A. in 1950. He pursued advanced studies at Columbia University under Arthur Burns but left because demand at Townsend-Greenspan and Company was pulling him away. He would not receive his Ph.D. from NYU until 1977, and the dissertation he submitted was later removed from the university at his own request in 1987, the year he became Fed chairman. When Barron's obtained a copy in April 2008, the magazine noted that it contained a discussion of soaring housing prices and their effect on consumer spending, and that it even anticipated a bursting housing bubble.

• 3. The Philosopher's Apprentice

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  In the early 1950s, Greenspan's first wife, Joan Mitchell, introduced him to Ayn Rand, the novelist and architect of the philosophy known as Objectivism. Rand gave him a nickname: "the undertaker", a reference to his dark clothing and reserved manner. At the time, Greenspan was a logical positivist. Rand's associate Nathaniel Branden converted him to Objectivism, and Greenspan became a member of Rand's inner circle, the Ayn Rand Collective, reading Atlas Shrugged while it was still being written. During the 1950s and 1960s, he wrote articles for Objectivist newsletters and contributed several essays to Rand's 1966 book Capitalism: The Unknown Ideal, including one supporting the gold standard. He also offered a ten-lecture course called "The Economics of a Free Society" under the auspices of the Nathaniel Branden Institute, examining the causes of prosperity and depression and the fallacies of what he called collectivist economics. When Greenspan was sworn in as chairman of the Council of Economic Advisers in 1974, Rand stood beside him at the ceremony. They remained friends until her death in 1982. Years later, Harry Binswanger, a fellow Objectivist, argued that Greenspan's actual conduct at the Federal Reserve represented an abandonment of free-market principles. Greenspan's response was that in a democratic society, individuals must make compromises, and that he personally believed the country had done "extremely well" under a gold standard without a central bank.

• 4. The Fed Chair Years

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  President Ronald Reagan nominated Greenspan on the 2nd of June 1987 to succeed Paul Volcker. The Senate confirmed him on the 11th of August 1987. Two months later came the first real test. After the 1987 stock market crash, Greenspan announced that the Fed stood ready to provide liquidity to support the financial system. The policy actions that followed became known as the "Greenspan put", a term implying that the Fed would always step in to cushion markets from severe losses. President George H. W. Bush later attributed his re-election loss partly to what he saw as a sluggish Fed response. Bill Clinton reappointed Greenspan and consulted him closely; Greenspan supported Clinton's 1993 deficit reduction program. He also played a central role in organizing the U.S. bailout of Mexico during the 1994-1995 peso crisis. When the dot-com boom reached its peak, Greenspan raised interest rates several times in 2000. Nobel laureate Paul Krugman argued that Greenspan had instead waited until the bubble burst and then tried to clean up afterward rather than acting preventively. After the 11th of September 2001 attacks and a wave of corporate scandals, Greenspan led the Federal Reserve in cutting rates repeatedly, bringing the federal funds rate down to 1% in 2004. Greenspan also privately advised senior members of the George W. Bush administration that removing Saddam Hussein was important for oil market stability, warning that even a moderate disruption to oil flow could bring the industrial world "to its knees". On the 18th of May 2004, Bush nominated him for an unprecedented fifth term as chairman. Greenspan's term ended on the 31st of January 2006; he gave no broadcast interviews as chairman from 1987 through 2005. His successor, Ben Bernanke, was confirmed by President George W. Bush.

• 5. The Bubble's Shadow

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  In a speech on the 23rd of February 2004, Greenspan suggested that more homeowners should consider adjustable-rate mortgages. The federal funds rate stood at a then-record low of 1%. A few months after that speech, Greenspan began raising rates in a series of hikes that would bring the funds rate to 5.25% roughly two years later. Many subprime borrowers had taken out ARMs that reset sharply upward, and the subprime mortgage industry collapsed in March 2007, with major lenders filing for bankruptcy protection. Greenspan later said he did not fully grasp the housing bubble "until very late in 2005 and 2006". In congressional testimony on the 23rd of October 2008, he conceded that he had put too much faith in the self-correcting power of free markets. When Representative Henry Waxman pressed him to say plainly whether his ideology had been wrong, Greenspan replied: "Absolutely, precisely." He added: "I have found a flaw. I don't know how significant or permanent it is. But I have been very distressed by that fact." He acknowledged that he had been operating under that framework for 40 years or more. Joseph Stiglitz argued in September 2008 that Greenspan "didn't really believe in regulation", and that calls for self-regulation amounted to "an oxymoron". The documentary film Inside Job named Greenspan as one of those responsible for the 2008 financial crisis, and Time magazine included him in its list of the "25 People to Blame for the Financial Crisis". Greenspan himself placed far more blame on Wall Street than on Fannie Mae or Freddie Mac, arguing that Wall Street's practice of bundling subprime mortgages into securities was the more consequential factor.

• 6. The Man Behind the Words

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  Greenspan wrote his memoir, The Age of Turbulence: Adventures in a New World, in longhand, mostly while soaking in the bathtub, a habit he had maintained since injuring his back in 1971. The book was published on the 17th of September 2007. In it, he criticized President George W. Bush, Vice President Dick Cheney, and the Republican-controlled Congress for abandoning fiscal discipline, writing: "They swapped principle for power. They ended up with neither. They deserved to lose the 2006 election." He praised Bill Clinton above all the presidents he had served, citing Clinton's "consistent, disciplined focus on long-term economic growth". He described Richard Nixon, whose domestic policy coordination he had accepted in mid-1968, as "sadly paranoid, misanthropic and cynical", despite acknowledging Nixon's intelligence. Of Gerald Ford, under whom he chaired the Council of Economic Advisers, Greenspan wrote: "he was as close to normal as you get in a president, but he was never elected." On his personal life, he had married artist Joan Mitchell in October 1952, though the marriage was declared invalid ten months later. He dated newswoman Barbara Walters in the late 1970s. In December 1984, he began dating journalist Andrea Mitchell; she was 38 at the time and he was 58. In April 1997, they were married by Supreme Court Justice Ruth Bader Ginsburg. Queen Elizabeth II made Greenspan an honorary Knight Commander of the Order of the British Empire in September 2002, and President George W. Bush awarded him the Presidential Medal of Freedom in November 2005. Greenspan turned 100 on the 6th of March 2026.