Made significant contributions to the US economy's prosperity for over a decade from the early 90s...also criticized for responsibility in the global financial crisis
During the IMF foreign exchange crisis, also persuaded American banks to extend repayment periods for South Korea's short-term external debt
Former Fed Chairman Alan Greenspan
The Federal Reserve (Fed) announced on the 22nd that former US Federal Reserve Chairman Alan Greenspan had passed away. He was 100 years old.
According to AP and other foreign media, Greenspan, who had been battling Parkinson's disease complications, peacefully passed away at his home in Washington D.C. today.
In a press release on the same day, the Fed stated with deep sorrow that "the passing of former Chairman Alan Greenspan is deeply mourned" and noted that his contributions to monetary policy and economic theory have left an indelible mark not only on the Fed but also on the economy as a whole and American society.
The Fed highlighted that Greenspan led the institution through both significant economic expansions and severe crises, noting that during his tenure, the Fed supported US economic growth and achieved price stability.
Greenspan served as chairman of the Federal Reserve from 1987 to 2006 for a total of 19 years, becoming the second-longest serving chair after William McChesney Martin (served from 1951-1970).
Crossing four US administrations—Ronald Reagan, George H.W. Bush (Bush Sr.), Bill Clinton, and George W. Bush (Bush Jr.)—Greenspan is remembered for both his achievements and controversies.
According to AP, the 10-year economic boom in the United States starting from March 1991 and the sharp rise in stock prices are considered major accomplishments during Greenspan's tenure.
Inflation, which had plagued the US and world economies in the 1970s, stabilized under Greenspan’s leadership. During his term, unemployment rates fell below 4% for the first time since 1970.
Particularly, just two months after taking office as chairman in 1987, the stock market experienced its worst one-day drop (Dow Jones Industrial Average plummeted by 22.6%), but Greenspan's assurance of ample liquidity supply helped stabilize the market quickly.
Dubbed 'the Maestro' during his tenure leading the era of sustained US growth and prosperity, every word he spoke was believed to sway global economic trends. Even the rumor that carrying a full briefcase into Fed meetings signaled impending policy changes led to the creation of the term "Briefcase Indicator."
Greenspan was also known for his passionate work ethic during his tenure as chairman. He enjoyed meticulously analyzing economic data from monthly freight car loadings to steel production, and often called other government agencies' economic experts to discuss details.
However, he cannot escape responsibility for the global financial crisis that hit two years after leaving the Fed in 2008.
The global financial crisis, which plunged the US economy into its worst downturn since the Great Depression, was largely attributed to Greenspan's era of accommodative monetary policy and insufficient oversight due to excessive trust in financial markets.
Greenspan’s low-interest-rate policies contributed to housing price bubbles, while his support for easing financial regulations allowed banks and other financial institutions to introduce risky derivatives, increasing the risk of insolvency.
Later on, Greenspan admitted that assuming US banks could self-regulate was a mistake, according to AP.
Greenspan, who was well aware of the 'power' his words held during his tenure as chairman, was known for using ambiguous language.
He is famously quoted from a congressional committee appearance saying, "You may believe you understand what you think I said, but I am not sure you realize that what you heard is not what I meant."
In addition, AP reported that during the 1997 IMF foreign exchange crisis, Greenspan-led Fed persuaded American banks to extend repayment periods for short-term loans to South Korea in distress.
Born in New York City's Manhattan, Greenspan was a math prodigy from a young age and had deep expertise in music, having once attended the Juilliard School of Music. He completed his undergraduate studies through doctoral programs in economics at New York University and operated an economic consulting firm for nearly 30 years before being appointed as Fed chairman by President Reagan.
His family includes his wife Andrea Mitchell, a renowned journalist.
jhcho@yna.co.kr
