Alan Greenspan, who led the Federal Reserve System for more than 18 years, passing through what became the longest economic expansion in U.S. history, has died at the age of 100 at his home in Washington. His wife, NBC News correspondent Andrea Mitchell, attributed his passing to complications from Parkinson’s disease. The couple had been married since 1997 and did not have any children; Mitchell is his only survivor.
During his tenure from 1987 to 2006, Mr. Greenspan was often viewed as nearly infallible. Investors closely analyzed his statements looking for hints about interest rates, and his briefcase became so scrutinized that it sparked a Wall Street superstition dubbed the “briefcase indicator.” He wielded incredible influence, famously causing stock prices to plummet worldwide with two words: “irrational exuberance” on December 5, 1996.
However, after stepping down, his reputation began to wane. The housing market, which he had refused to acknowledge as a bubble, crashed, leading to a toxic mortgage securities crisis. This precipitated the worst recession since the Great Depression. Critics pointed to his low interest rates and his belief that markets could self-regulate as contributing factors.
“Those of us who counted on the self-interest of financial institutions to safeguard shareholder capital are in a state of disbelief,” Greenspan remarked to Congress in October 2008, later clarifying with, “I made a mistake.”
The Financial Crisis Commission further criticized him, asserting that years of deregulation, encouraged by Greenspan and others, eroded protections that might have prevented the financial disaster.
From Juilliard to the Fed
Greenspan’s rise to financial fame was unexpected. Born in Manhattan’s Washington Heights on March 6, 1926, he was raised by his mother after his parents divorced. He dropped out of the Juilliard School, where he had pursued music, and even played professionally for a short while before realizing it might not be his calling.
After earning a doctorate in economics from New York University in 1977, he headed an economic forecasting firm called Townsend Greenspan for nearly three decades, analyzing an array of data to anticipate economic trends. This meticulous nature persisted throughout his career. As chairman, he started his day early, often reading through Federal Reserve memos while relaxing in the bathtub.
His staunch belief in free markets was influenced by novelist Ayn Rand, who once dubbed him “The Undertaker” due to his somber demeanor. He ventured into Republican politics, initially as an advisor to Richard Nixon, and later served as chief economic advisor to President Gerald Ford.
Black Monday and Boom
In 1987, President Ronald Reagan appointed him to succeed Paul Volcker. His first significant challenge arrived shortly thereafter on October 19, dubbed “Black Monday,” when the Dow Jones Industrial Average plummeted by 22.6% in one day. Greenspan injected funds into the market, stabilizing it and quickly cementing his reputation.
He managed the central bank with a level of authority few had seen before. Janet Yellen, who served on the Fed’s board under him and later became chair herself, recalled that she often felt compelled to agree with him without question.
Greenspan’s legacy included two notable decisions: in 1994, he engineered a successful soft landing by raising interest rates rapidly to curb inflation, and in the late 2010s, as unemployment dipped below 4% for the first time since 1970, he opted not to raise rates, arguing that tech-driven productivity would prevent price increases—a period of economic expansion that lasted over a decade.
Regulatory Blind Spots
In the late 1990s, he, along with other Clinton administration officials, blocked regulation efforts led by Brooksley Vaughn, the head of the Commodity Futures Trading Commission, regarding the expanding over-the-counter derivatives market—a move that later contributed to the financial crisis. Many attribute his overconfidence in the self-regulation of financial markets as a significant flaw.
Alan Blinder, a former Fed vice chairman and Princeton economist, stated, “He conducted monetary policy like a maestro,” but lamented that his regulatory oversight caused extensive damage.
Even post-crisis, Greenspan’s influence persisted. Kevin Warsh, who was appointed as Fed chairman by President Trump this spring, praised him during his swearing-in, hinting at a return to the careful communication style emblematic of the Greenspan era and an optimistic view of artificial intelligence’s potential for economic growth.
Until the end of his life, Greenspan maintained that evaluation of his work was often unfair. In 2008, he remarked, “I used to be praised for something I didn’t do, and now I’m being criticized for something I didn’t do.”
