Former Federal Reserve Chair Alan Greenspan was renowned for his long tenure, nuanced ecnonomic views, and perhaps most famously, his “Greenspan-speak” on monetary policy, markets, and philosophy.
Greenspan passed away at the age of 100 due to complications from Parkinson’s Disease, his wife Andrea Mitchell shared on June 22.
Greenspan served as the 13th chairman of the Fed Board of Governors from 1987 to 2006, and his contributions to monetary policy and economic thought left a lasting mark on this institution, on the broader field of economics, and on the country, the Fed said in an announcement.
His tenure led the world’s largest central bank through periods of significant economic expansion as well as periods of acute stress.
Greenspan was seen as the “maestro” who kept the economy humming through four U.S. presidents, seven Treasury secretaries, a stock market crash, and an internet boom.
His term “irrational exuberance” became part of the national vocabulary during the internet bust.
But he was best known for offering opaque, pithy, and erudite statements that often left fellow Fed officials, market watchers, and the media striving to find the kernel of truth draped in intellectual verbiage.
“Alan Greenspan deserves to be remembered as one of the great central bankers of the second half of the 20th century, in a global context, not just at the Fed,” Roger Ferguson, who served as Fed vice chairman from 1999 to 2006, told Bloomberg.
Greenspan “was among the first to recognize the impact of technology on increasing productivity in the U.S., allowing the economy to grow faster than we had thought without inflation,” Ferguson added.
“What an extraordinary life,” University of Michigan Economics Professor Justin Wolfers told The Wall Street Journal. “A true public servant, and an economist with intellectual courage who got a lot more right than wrong.”
Here are, in no particular order, 10 of Greenspan’s more notable comments.
On clarity, market valuations, and deficits
Clarity: “If I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.”
Market valuations: “How do we know when irrational exuberance has unduly escalated asset values?”
Deficits: “Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of this insidious process.”
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On education, market psychology, and U.S. debt
Education: “The number one problem in today’s generation and economy is the lack of financial literacy.”
Market psychology: “Excessive optimism shows the seeds of its own reversal in the form of imbalances that tend to grow over time.”
U.S. debt: “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.”
On behavior, trust, and action
Behavior: “Finance, however, is almost wholly behavioral animal spirits.”
Trust “…our market system depends critically on trust — trust in the word of our colleagues…”
Action: “The problem we face today is not one of too little knowledge, but of too little willingness to act on what we know.”
On regulation and more
Regulation: “I made a mistake in presuming that the self-interests of organizations… were such that they were best capable of protecting their own shareholders…”
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