Paul Wiseman and Christopher Rugaber
Alan Greenspan, the jazz-playing US Federal Reserve chair who was celebrated for engineering a decade of prosperity but later shared the blame for a devastating financial crisis, died on Monday (US time). He was 100.
Greenspan died from complications of Parkinson’s disease, said his wife of 29 years, NBC News correspondent Andrea Mitchell.
“To me he was my husband, who shaped my life from our very first date in 1984,” Mitchell wrote. “He had ‘irrational exuberance’ for baseball, the Washington Commanders, tennis, golf, and music, especially jazz. He will be remembered for his brilliance and his kindness. Being his life partner was the joy of my life.”
The Fed said Greenspan helped to cement trust in the Fed during a time of economic uncertainty.
“Under his leadership, the Federal Reserve achieved a sustained era of price stability that supported economic growth and helped anchor the public’s confidence in the institution,” the central bank said in a statement on Monday.
Greenspan was hailed as “Maestro″ — before crisis hit
In 18 1/2 years at the Fed, Greenspan presided over a breathtaking surge in stock prices and a 10-year economic boom that started in March 1991. He was celebrated as “Maestro″ and “Oracle″ — an economic virtuoso whose every utterance was dissected for clues on where interest rates and the economy were headed.
The intense scrutiny of Greenspan’s intentions gave birth to new Fed folklore: the “Briefcase Indicator.” A stuffed briefcase carried into Fed meetings implied changes might be afoot because Greenspan carried with him charts and research to make his point.
But his reputation began to suffer almost as soon as he left the Fed in 2006. American housing prices tumbled rapidly, causing huge losses for banks that had repackaged mortgage loans into a dizzying array of complex securities. The growing financial crisis pushed the US economy into the Great Recession of 2007-2009 — the deepest downturn since the 1930s.
Critics blamed the devastation on Greenspan’s easy money policies and his support for deregulated financial markets. Greenspan himself later acknowledged “I made a mistake″ in assuming that banks could essentially regulate themselves.
Greenspan became the authoritative voice on the US economy
For almost two decades, it seemed that Greenspan could do no wrong. Not only in the United States but across the world, he was regarded with a mixture of reverence and awe. Many openly dreaded the day when he would leave the Fed.
Investors hung on his sometimes inscrutable observations. In the most well-known such remark, Greenspan sent financial markets reeling on December 5, 1996, when he suggested with just two words — “irrational exuberance” — that stock prices were too high.
Mindful of his power to move markets, Greenspan typically resorted to obfuscation. At times, he even joked about his habit of doing so. “I know you believe you understand what you think I said, but I am not sure you realise that what you heard is not what I meant,” Greenspan once told a befuddled congressional committee.
Greenspan was one of the few Fed chairs that Kevin Warsh, chosen by Trump to lead the Fed, praised at his swearing-in last month. Warsh has said one of his goals is to dial back the Fed’s communications, particularly the guidance it gives financial markets, an approach closer to Greenspan’s than to Warsh’s immediate predecessors as chair.
Yet for all his circumspect comments, Greenspan did make the Fed more transparent. He was the first chair to issue a statement explaining the Fed’s interest-rate decisions. Before Greenspan, investors had to divine the Fed’s intentions from market changes. Greenspan also began to release minutes and even full transcripts of meetings, though those changes were in response to pressure from Congress.
A protégé is born
Born in the Washington Heights neighbourhood of Manhattan, the young Greenspan was a math whiz who was trotted out by his mother to show off for visitors.
“I was a prop at parties,″ he said in a 2007 interview with PBS NewsHour. A Julliard School dropout, he worked as a professional musician in his teens, playing clarinet and saxophone alongside the future jazz great Stan Getz. It was a humbling experience that persuaded the young Greenspan to seek another line of work.
He pursued undergraduate and graduate study in economics at New York University, eventually earning a doctorate there. For most of three decades, he ran an economic consulting firm. During the 1950s, he became a disciple of the libertarian philosopher Ayn Rand, who stuck him with the nickname the “Undertaker″ for his dark clothes and quiet bearing. When Greenspan was sworn in as President Gerald Ford’s chief economic adviser in 1974, Rand stood beside him.
An early trial for a new Fed chair
President Ronald Reagan tapped Greenspan to run the Fed in 1987. He was tested almost immediately. On October 19, 1987, which came to be known as “Black Monday,” the stock market suffered the worst one-day percentage loss in American history just two months into his term. The Dow Jones Industrial Average plunged 22.6 per cent for reasons that remain opaque to this day.
‘I know you believe you understand what you think I said, but I am not sure you realise that what you heard is not what I meant.’
Alan Greenspan once Greenspan’s repsonse to a befuddled congressional committee was an example how he delighted in obfuscation.
Greenspan was credited for helping restore stability. He assured Wall Street that the Fed would supply as much money to the financial system as was needed to restore calm. Stocks recovered, and the American economy emerged unscathed by the market crash.
During his tenure at the Fed, Greenspan drew praise for presiding over what was at the time the longest economic expansion in American history. (It was later surpassed by a 128-month expansion that ran from June 2009 through February 2020.) During Greenspan’s tenure at the Fed, the nation’s unemployment rate briefly dropped below 4 per cent for the first time since 1970.
And inflation, which had bedevilled the United States and much of the global economy during the 1970s, was remarkably dormant during Greenspan’s chairmanship, something many economists thought impossible for so long a period.
During the long boom, Greenspan argued that improvements in technology had made the economy so efficient that it could run faster and at lower rates of unemployment, without unleashing inflation. As a consequence, the theory went, the Fed could keep interest rates low even when the economy was roaring.
The economy soared in the late 1990s, expanding by 4 per cent or more for four straight years, and Greenspan was credited with holding off on rate hikes and allowing the boom to run.
Warsh has said that AI could reproduce the 1990s experience of high growth with low inflation, though economists are sceptical it will play out the same way.
A passion for numbers and life
As Fed chair, Greenspan relished poring over obscure economic data, from monthly boxcar loadings to steel production, all in a bid to assess where the economy was going. He would often phone economists at other government agencies to discuss details. He would rise early each morning for a two-hour soak in his bathtub, time that he used to review statistics and Fed staff memos.
Improbably, Greenspan also made the gossip pages as an unlikely ladies’ man. He dated the television journalist Barbara Walters and later married Mitchell after a 12-year courtship. They had no children.
Greenspan dated Walters while working as an adviser to President Gerald Ford. According to a biography of Greenspan, The Man Who Knew by Sebastian Mallaby, when Ford read a newspaper item about the pair, he cut it out and sent it to his chief of staff, Dick Cheney, with a note that said, “I don’t believe it.”
A strong faith in self-regulating markets is challenged
All along, Greenspan held fast to the belief that financial markets could largely regulate themselves. With officials from President Bill Clinton’s White House, he helped block efforts by Brooksley Born, the nation’s top commodities regulator, to bring federal oversight in the late 1990s to the shadowy market in over-the-counter derivatives. The derivatives allowed speculators to make bets on everything from the price of oil to high-risk mortgages.
Eventually, history would vindicate Born, not the Maestro.
The low interest rates Greenspan had engineered helped swell housing prices into a dangerous bubble. And the financial deregulation he supported allowed banks and other financial firms to pile up huge risks, often hidden from government supervision. Bad derivatives bets helped sink insurance giant American International Group, which required a $US180 billion taxpayer bailout. Vaunted investment firms Bear Stearns and Lehman Brothers failed and US financial markets nearly collapsed.
The Financial Crisis Inquiry Commission, which was assigned to investigate the debacle by Congress, concluded:
“More than 30 years of deregulation and reliance on self-regulation by financial institutions, championed by former Federal Reserve chairman Alan Greenspan and others … had stripped away key safeguards, which could have helped avoid catastrophe.”
Life after the Fed
In the years after stepping down as Fed chairman in 2006 just shy of his 80th birthday, Greenspan kept busy doing what he loved to do most — following the economic data. He ran his own consulting firm, Greenspan Associates, through which he dispensed advice to Wall Street clients and collected handsome speaking fees.
He kept up a busy schedule well into his 90s, writing his memoir and two other books on the economy, as well as opining on the latest economic developments on television news shows.
He also signed onto opinion articles and statements defending the Federal Reserve’s political independence from President Donald Trump’s ongoing attacks. In January 2026, he signed a statement criticising the Trump administration’s investigation of Fed Chair Jerome Powell. The statement, which was also signed by two other former Fed chairs and five former Treasury secretaries, called the investigation “an unprecedented attempt to use prosecutorial attacks to undermine” the Fed’s independence and warned it would have “highly negative consequences for inflation.”
In his 2013 book The Map and the Territory, Greenspan defended himself against critics who assigned him significant blame for the 2008 financial meltdown. He argued that traditional economic forecasting was no match for the irrational risk-taking that can feed catastrophic price bubbles.
“Bubbles go up very slowly as euphoria builds,” Greenspan said in a 2013 interview with The Associated Press. “Then fear hits, and it comes down very sharply. When I started to look at that, I was sort of intellectually shocked.”
AP
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