{"id":3002,"date":"2021-05-15T16:31:22","date_gmt":"2021-05-15T16:31:22","guid":{"rendered":"https:\/\/enorcerna.com\/wiki\/definition\/alan-greenspan-biography-who-is-he-and-what-he-did-2021\/"},"modified":"2021-05-15T16:31:22","modified_gmt":"2021-05-15T16:31:22","slug":"alan-greenspan-biography-who-is-he-and-what-he-did-2021","status":"publish","type":"post","link":"https:\/\/enorcerna.com\/wiki\/definition\/alan-greenspan-biography-who-is-he-and-what-he-did-2021\/","title":{"rendered":"Alan Greenspan - Biography, who is he and what he did | 2021"},"content":{"rendered":"
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Alan Greenspan is a New York economist born in 1926. Greenspan is remembered for his extensive career at the head of the United States Federal Reserve (1987-2006).<\/strong><\/p>\n

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Alan Greenspan was born in Manhattan, New York, in 1926. He comes from a Jewish family of Romanian and Hungarian origin. Already from an early age, Greenspan showed a great interest in mathematics and music. All this would lead him to play the clarinet and the saxophone and to go through the famous Juiliard music school. <\/p>\n

Career and PhD<\/h2>\n

His ability with data and figures led him to earn a degree in economics from New York University in 1948. By 1977, Greenspan would also obtain a doctorate in economics from New York University. <\/p>\n

In his thesis he dealt with issues such as the increase in house prices, and its effect on consumption or the anticipated appearance of a growing real estate bubble. All of these degrees were obtained at New York University.<\/p>\n

Before obtaining his doctorate at New York University, he tried it at Columbia University, but eventually gave up. In this period he coincided with Benjamin Graham, who taught, and Warren Buffet, who was a student. Among the influences he received at this stage, the ideas of Arthur Burns stand out, which were based on a radical opposition to the budget deficit due to its relationship with inflation.<\/p>\n

Just before the Watergate scandal hit the Nixon administration, he was appointed chairman of the White House council of economic advisers until 1974. He held this position with Nixon and Gerald Ford.<\/p>\n

Alan Greenspan as Chairman of the Federal Reserve<\/h2>\n

In 1987, Alan Greenspan was appointed chairman of the Federal Reserve, replacing Paul Volcker. Shortly after, the great crisis of 1987 would break out. In this context, it gained fame and importance given that its role was considered fundamental to achieve the American financial sanitation. One of his main skills was his ability to reach agreements with politicians from the two main American parties: Republican and Democratic. At the same time, he was able to achieve important consensus with other members of the Federal Reserve. He remained in office with Ronald Reagan, George HW Bush, Bill Clinton, and George W. Bush.<\/p>\n

In this way, Greenspan took command of the body responsible for banking supervision and monetary policy, having the capacity to modify interest rates.<\/p>\n

Now, Greenspan's arrival did not come at an easy time. He had barely been named president when the Wall Street stock market plunged 20%. Faced with the worst fall that the US stock market had suffered, it was imperative to react quickly. And, there was the possibility that the financial system would collapse.<\/p>\n

Greenspan responded quickly, stating that the Federal Reserve would provide the necessary liquidity to ensure the continuity of the financial system.<\/p>\n

Similarly, Greenspan's decisions on interest rates always had major repercussions on the markets. Hence, he always valued the impact of his decisions on the stock markets.<\/p>\n

The Reagan presidency was succeeded by fellow Republican George HW Bush. One of the most important decisions during the term of George HW Bush was the entry of the United States into the Gulf War. The economic cost of that war was colossal for the Americans and, to add insult to injury, the country was entering a period of recession. Faced with such a complex situation, Greenspan advised cuts in public spending and increases in taxes.<\/p>\n

Precisely, the economic management cost President George HW Bush a second term. Despite the electoral victory of Democrat Bill Clinton, Greenspan, who had always served Republican presidents, continued at the helm of the Federal Reserve.<\/p>\n

Greenspan and the tequila crisis<\/h2>\n

During his time as president of the Federal Reserve during the Clinton terms, Mexico had to suffer one of its worst economic moments. In 1995 a financial crisis had broken out in Mexico, known as the tequila crisis.<\/p>\n

Well, the monetary authorities of Mexico had carried out an excessive increase in interest rates to avoid the massive outflow of dollars. Thus, from Mexico it was decided to devalue the currency, which meant a colossal drop in the value of investments in the country. The risk not only affected Mexico, as the Mexican economy had an important relationship with the US economy. A great economic threat loomed over the United States and the intervention of Greenspan and the Treasury Department was necessary.<\/p>\n

In view of the dire situation, Greenspan opted to turn to the Exchange Stabilization Fund. In this way, the Americans granted a loan to their southern neighbor so that they could service their debts.<\/p>\n

Greenspan is known for his position on inflation. And the thing is, the North American economist is in favor of keeping price levels stable even when this means harming economic growth. All this led him to announce various increases in interest rates.<\/p>\n

In that same year, he did not hesitate to affirm that \u201cIt is not only that each financial institution has become less vulnerable to shocks caused by the underlying risk factors, but also that the financial system as a whole has become more resistant \u00bb. In this way, he understood that the problems that could arise in the financial markets were not inherent to a free market system, but to the greed with which economic agents operated.<\/p>\n

Thus, the New York economist would end his presidency of the Federal Reserve in 2006.<\/p>\n

Criticism leveled at Greenspan<\/h2>\n

Alan Greenspan, despite his abilities to win support and sympathy in different political sectors of the United States, received harsh criticism for his role as Chairman of the Federal Reserve. Especially in relation to the financial crisis that would ensue as of 2008.<\/p>\n

For some, the lack of regularization and the belief that market forces, acting freely, would generate economic improvement, are at the base of the crisis. Thus, given his staunch defense of derivative products, some, such as the banker Felix G. Rohatyn, have already pointed out the potential dangers of these products. However, Greenspan maintained his line, coming to defend derivatives before the Senate in 2003.<\/p>\n

In addition, it was blamed for being one of the main culprits of the bubbles created, as a result of keeping the reference rate between 0% and 2.5% for too long a period, which meant an increase in the money supply .<\/p>\n

In spite of everything, in 2008 he publicly acknowledged that his excessive faith in the ideology of the free market was wrong, and as a consequence he pointed out that the entire intellectual structure on which his philosophy and professionalism rested had collapsed.<\/p>\n

On trade, Greenspan has been against the increase in tariff barriers. According to Greenspan, trade wars erode the purchasing power of citizens and make all countries lose out. If free trade causes job losses in less competitive sectors, affected workers can recover thanks to unemployment benefits and career reorientation.<\/p>\n<\/div>\n\n\n

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