Alan Greenspan has died, and, with that, one cannot help but feel that the economic principles that have defined America for half a century may have died with him.
The renowned economist and former chairman of the Federal Reserve led the central bank for nearly 20 years under four presidents, building confidence in the Fed and shaping America’s economic policy from the Cold War through the new millennium.
Born in 1926 in New York City, he studied at Columbia University under economist and future Fed chair Arthur F. Burns. During the 1950s, he became friends with writer Ayn Rand, author of Atlas Shrugged, whose philosophy of Objectivism and laissez-faire capitalism had a profound impact on Greenspan.
He was an adviser on Richard Nixon’s 1968 presidential campaign but declined an official position in the administration, although he continued to provide informal guidance. After Nixon’s resignation, Greenspan served as chairman of the Council of Economic Advisers under President Gerald Ford.
It was President Ronald Reagan, whose economic policies keenly shaped the Republican party and the country at large, who appointed Greenspan chair of the Federal Reserve in 1987. Greenspan would face his first challenge that October, when the Dow Jones Industrial Average experienced its largest one-day percentage fall of 22 percent on what became known as Black Monday.
His response, immortalized as the “Greenspan put,” quickly stabilized the market by providing liquidity and quietly encouraging banks to lend on their usual terms, helping avoid an economic recession.
Greenspan shepherded the U.S. economy through what was then its longest period of expansion, from 1991 to 2001, and guided the Fed through crises such as the dot-com bubble burst and 9/11 before retiring in 2006, but he was not infallible.
Among other points of criticism, Greenspan was found to be partly responsible for the 2008 financial crisis by the Financial Crisis Inquiry Commission, which blamed Greenspan’s support of financial deregulation and tolerance of securities backed by subprime mortgage loans for the collapse.
Nonetheless, Greenspan garnered numerous accolades — the Presidential Medal of Freedom, the French Legion of Honor and honorary British knighthood among them — and his playbook will no doubt remain dog-eared by those who follow in his footsteps.
That does not make his death at age 100 feel like any less of a turning point though. Whether one is championing tariffs on one side of the aisle or democratic socialism on the other, Americans and their leaders are not content to let economic policy continue as it has since the 1980s, nor should they be.
With that come some hard questions about the future of America’s economy and how we can improve sensibly while staying grounded in the virtues that have made America one of the most respected economic engines on Earth. Some answers can undoubtedly be drawn from Greenspan’s life, both his triumphs and his follies.
Among them, a couple cardinal lessons come to the forefront: Steadfast commitment and a focus on the long game breed strength, and quiet confidence is the greatest source of power.
