Alan Greenspan

Alan Greenspan, 2002

Alan Greenspan (born March 6, 1926 in New York ) is an American economist . From August 11, 1987 to January 31, 2006, he was Chairman of the US Federal Reserve System .

He belongs to the Republican Party .

Education and personal life

Greenspan was born into a Jewish family of Hungarian immigrants and initially wanted to be a musician . In the Bronx district of his native New York, the son of a stockbroker , who was also a cantor at a synagogue , attended the famous Juilliard School of Music . His instruments were the saxophone and the clarinet , with which he emulated his role model Benny Goodman . In 1944 and 1945 he toured with Henry Jerome's band .

In 1951 he married Joan Mitchell. The marriage with her was divorced in 1952.

From 1944 he completed an economics degree, which he graduated from New York University with a master's degree in 1950 . He then briefly studied at Columbia University . In 1977 he received his PhD from New York University . In 2005 he was awarded an honorary doctorate from the same university.

At 71, Greenspan married NBC White House correspondent at the time , Andrea Mitchell .

Greenspan's financial policy career began in 1953 with the consulting firm "Townsend-Greenspan & Co". In 1967 he supported Richard Nixon in the election campaign, who appointed him President of the Council of Economic Advisers in 1974 .

He is now of the opinion that tax cuts do not necessarily promote economic growth and calls for the 2001 and 2003 tax breaks under the Bush administration to be reduced .

Alan Greenspan is an avowed atheist . He was friends with Ayn Rand , one of the most influential political writers in America.

Chairman of the Federal Reserve System

From August 11, 1987 to January 31, 2006, he was Chairman of the United States Federal Reserve Board. Greenspan achieved international renown in this position. In total, he worked under four US presidents . He always opposed a fixed rule binding of monetary policy, among other things with his well-known saying: "Monetary policy is not an applied science, but an art!"

His appointment to the head of the Fed was made by Republican President Ronald Reagan . Greenspan was also highly regarded by Reagan's successors, George Bush , Bill Clinton, and George W. Bush .

During Greenspan's tenure there were a number of economic crises : in 1987 the USA suffered from the consequences of a severe stock market crash , in 1990 Greenspan resisted pressure from Bush Sr. to implement an expansionary monetary policy . Instead, Greenspan stuck to a course geared towards price level stability, which is why he was made responsible for the slight recession that began in the USA in mid-1990 and was additionally fueled by the 2nd Gulf War .

With Bush's successor Clinton, Greenspan worked together in a goal-oriented manner from 1993; While Clinton pursued a restrictive fiscal policy aimed at budget consolidation , the Fed succeeded in stimulating economic development through an expansionary monetary policy.

At the initiative of Greenspans and the ECB, the central banks of the USA, Japan, Canada and the EU intervened in the early days of the euro . The euro, which had fallen below 0.85 US dollars, recovered to 90 US cents thanks in particular to the support purchases of September 22, 2000 . Together with the ECB and the Japanese central bank, the Fed intervened under Greenspan in the aftermath of September 11, 2001.

In 2001, a lawsuit against Greenspan was pending in the USA on suspicion of manipulating the gold price , but this was without consequences for the banker.

Greenspan's fifth term as Chairman ended on January 31, 2006. George W. Bush appointed Ben Bernanke to succeed him .

Consultancy

On August 13, 2007, it was announced that Alan Greenspan would work for Deutsche Bank as an investment banking advisor.

Greenspan has been an advisor to Paulson & Co. hedge fund company since January 2008 . It has been contractually agreed that Greenspan will act solely as an advisor to the Paulson & Co. hedge fund.

Views on the Fed chief

Alan Greenspan 2007

Greenspan retired as President of the Federal Reserve on January 31, 2006. On October 24, 2005, Ben Bernanke was nominated to succeed him . On this occasion, numerous interpretations of the "legend" Greenspan could be heard in the financial world; Among other things, Global iNet News / Berlinkontor reported:

“Alan Greenspan (79), the most powerful central banker in the world, is leaving office after 18 years. When this legendary head of the US Federal Reserve Bank stepped in front of the microphones, not only bankers, business leaders, foreign exchange dealers, shareholders and small investors held their breath, but also the leaders of the world. Every time this 'mogul of international finance' spoke out in public, the monetary earthquake needle trembled on the Richter scale of the globalized financial world. "

The trend-setting analyzes and measures that Greenspan - as they say - often conceived while relaxing in the bathtub , fascinated and influenced not only the US economy, but the financial systems worldwide. Greenspan, whom former US Congress banking committee chair Phil Gramm called "the greatest central banker of all time," did indeed act like a director of all speculation and exchange rates.

Because of its low interest rate policy , Greenspan has been called the “Interest Eliminator”. Berlinkontor writes: “ Greenspan always followed his own inspirations and convictions - and often dominated politics in the White House, in the US Congress and on the international financial markets. "

Greenspan was often seen as the secret most powerful man in the world, as his (deliberately vague) hints often set the stock markets in motion. During his time as Fed chief, his appearances attracted a great deal of attention worldwide, especially during the meetings at which the new monetary policy steps were to be discussed and decided. In order to be able to determine the amount of the interest rate adjustment and the consequences for the financial market in advance of such meetings , stock market commentators invented the briefcase indicator .

In addition to the predominantly positive opinions on the “Greenspan era”, however, more critical voices have recently been voiced, among other things, pointing to Greenspan's joint responsibility for the speculative price surge in the stock and real estate sector due to the policy of cheap money . For example, under his leadership, M3 grew from $ 3.614 trillion at the time he took office to $ 10.250 trillion at the end of his term. H. to 283.62%.

Furthermore, he was criticized for his often nebulous, unclear statements. also called Greenspeak , which, in the opinion of many economists, led to unnecessary uncertainty in the financial markets. Greenspan himself defended this strategy, however, as he saw opportunities for monetary policy impulses only in the form of surprising market interventions by the central bank. He said of himself, “I know you think you know what you think I said. But I'm not sure they realize that what you heard is not what I mean. ”A year and a half after leaving office, Alan Greenspan admitted that he deliberately led his audience on the ice. If he was asked something to which he could not or did not want to answer, he fell into crude sentence constructions. His audience would then have thought he had said something incredibly profound and thus answered their question.

The Neue Zürcher Zeitung of October 26, 2008 pointed out that Nobel Prize winner Paul Krugman named Greenspan in September 2008 as the main culprit behind the financial crisis. James K. Galbraith described Greenspan's paper on the crisis of March 9, 2010 as garbage and complained that the word “responsibility” was never used. Greenspan has since been heard as a witness before the Financial Crisis Inquiry Commission .

Hedonic calculation of inflation and growth

Alan Greenspan is an advocate of the hedonic calculation of inflation and growth. In addition to the price change, the hedonic calculation also includes the change in quality of a shopping basket. In contrast to methods with pure price changes, the hedonic calculation leads to lower values for inflation and higher values for growth. Increases z. If, for example, the computing power of a computer is 50% at the same price, this causes a price decrease of 33% and a growth of 50%.

In his work "The Map and the Territory", published in 2013, he shows that in the USA the enormous increase in social spending has displaced savings one-to-one.

Honors

The American Philosophical Society , of which he became a member in 2000, awarded him their Benjamin Franklin Medal for Distinguished Public Service in 1998 . 2005 gave US President George W. Bush, Greenspan, the Medal of Freedom ( "Presidential Medal of Freedom"), the highest civilian honor in the United States.

Self-criticism after the beginning of the crisis

After the US stock market crash in September 2008, Alan Greenspan confessed to the US Congress Committee that he had too much hope in the markets' self-healing powers. He agreed on the Members of California , Henry Waxman , "Do you feel that your ideology has pushed to decisions that now you want to have not met them so?" When Waxman asked him concretizing: "With In other words, you found out that your worldview, your ideology, was wrong and didn't work? "Greenspan replied." Absolutely, exactly. You know, that's exactly why I'm shocked, because for over 40 years, with very convincing evidence, I assumed it worked extremely well. "Greenspan admitted that he was" partially "wrong in his approach to any banking regulation and said the current financial crash had “put him in a state of shocked disbelief”.

Later activities

In the 2008 presidential election in the United States , Greenspan voted for John McCain .

In the 2016 US presidential election , Greenspan abstained and did not vote for Donald Trump or Hillary Clinton . He said on the BBC :

" I'm a lifelong conservative Republican and it's the first time I didn't vote. I couldn't vote for Hillary Clinton and Donald Trump was not my candidate. "

“I've been a Conservative Republican all my life and this is the first time I haven't voted. I couldn't vote for Hillary Clinton and Donald Trump wasn't my candidate. "

- Alan Greenspan

In August 2019, in the face of President Trump's meddling in the affairs of the Federal Reserve, which was perceived as excessive, he signed an appeal with Paul Volcker , Ben Bernanke and Janet Yellen calling for an independent US Federal Reserve.

Quote

On February 22, 2002, after the bankruptcy of the Enron group in the face of falsified accounts, Greenspan reacted as the acting head of the US Federal Reserve in a crisis meeting extremely angry at such crimes by executives in companies and shouted furiously: “There's been too much gaming of the system until it is broke. Capitalism is not working! There has been a corrupting of the system of capitalism. "

"The euro will come, but it will not last"

- Alan Greenspan

swell

^ Alan Greenspan Biography . Retrieved October 17, 2008.

↑ Tax relief for the rich. Retrieved August 21, 2010 .

↑ Atheism: Ideology, Philosophy or Mentality ?, Richard Faber u. Susanne Lanwerd, Königshausen & Neumann, 2006, ISBN 3-8260-2895-3 ISBN 978-3-8260-2895-3

↑ Book Lists - The Library of Congress ( Memento of April 5, 2005 in the Internet Archive ) (English)

↑ Financial Times : Greenspan joins NY hedge fund - Jan 15, 2008

↑ Alan Greenspan: T he Crisis. ( Memento from February 17, 2012 in the Internet Archive )

↑ James K. Galbraith: Oh Please Huffington Post , March 25, 2010.

^ Financial Crisis Inquiry Commission, The New York Times, April 6, 2010.

^ Sewell Chan, Eric Dash: Committee Takes Up Subprime and Citi's Troubles. The New York Times, April 7, 2010.

↑ NZZ of October 26, 2013, Alan Greenspan's Zettelkasten book review on The Map and the Territory. The Penguin Press, New York 2013. 388 pp.

^ Member History: Alan Greenspan. American Philosophical Society, accessed August 28, 2018 .

^ Edmund L. Andrews: Greenspan Concedes Error on Regulation . In: The New York Times . October 23, 2008, ISSN 0362-4331 ( nytimes.com [accessed December 4, 2017]).

^ David Leonhardt: Greenspan's Mea Culpa . In: Economix Blog . ( nytimes.com [accessed December 4, 2017]).

^ Andrew Clark Jill Treanor: Greenspan - I was wrong about the economy. Sort of . In: The Guardian . October 23, 2008, ISSN 0261-3077 ( theguardian.com [accessed December 4, 2017]).

↑ Alan Greenspan Endorses John McCain. April 15, 2008, accessed April 25, 2020 .

↑ 'I'm in shock' - Alan Greenspan. In: bbc.com. November 10, 2016, accessed April 25, 2020 .

↑ Yun Li: Former Fed chairs Volcker, Greenspan, Bernanke and Yellen call for independent central bank. August 5, 2019, accessed on April 25, 2020 (English).

^ Forbes , March 5, 2003

↑ Washington Post , June 23, 2004

↑ Alan Greenspan quote from the Tagesspiegel (October 15, 2008)

↑ in International Herald Tribune, May 2, 1997, quoted from the Handelsblatt of December 30, 2011

literature

William Fleckenstein: Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve . McGraw-Hill, 2008, ISBN 978-0-07-159158-4
Alan Greenspan: My Life for Business. The autobiography . Campus Verlag, Frankfurt am Main and New York 2007, ISBN 978-3-593-38409-2 .
Alan Greenspan: The Map and the Territory . The Penguin Press, New York City, USA 2013.
Roland Leuschel , Claus Vogt : The Greenspan Dossier . Finanzbuch Verlag, Munich 2004, ISBN 3-89879-045-2 .
Sebastian Mallaby: The man who knew. The Life and Times of ALAN GREENSPAN , Penguin Press, New York, 2016.
Bob Woodward : Greenspan - Conductor of the World Economy . Europa Verlag, Hamburg 2001, ISBN 3-203-77675-8 .