who is alan greenspan 
alan greenspan is an american economist who was the chair of the board of governors of the federal reserve fed the united states central bank from 1987 until 2006 in that role he also served as the chair of the federal open market committee fomc which is the fed s principal monetary policymaking committee that makes decisions on interest rates and managing the u s money supply 1greenspan is best known for largely presiding over the great moderation a period of relatively stable inflation and macroeconomic growth that lasted from the mid 1980s to the financial crisis in 2007 early life and educationalan greenspan was born in new york city on march 6 1926 he received his bachelor s master s and doctoral degrees in economics all from new york university as well as studying economics at columbia university in the early 1950s under arthur burns who would later serve two consecutive terms as chair of the board of governors of the fed greenspan s first job in 1948 was not in government but for a non profit analyzing demand for steel aluminum and copper after this greenspan ran an economic consulting firm in new york city townsend greenspan co inc from 1954 to 1974 and 1977 to 1987 greenspan began his career in the public sector in 1974 when he served as chair of the president s council of economic advisers cea under president gerald ford in 1987 greenspan became the 13th chair of the fed replacing paul volcker president ronald reagan was the first to appoint greenspan to the office but three other presidents george h w bush bill clinton and george w bush named him to four additional terms his tenure as chair lasted for more than 18 years before he retired in 2006 to be replaced by ben bernanke after leaving he published his memoir the age of turbulence and began his own washington dc based consulting firm greenspan associates llc alan greenspan was known as being adept at gaining consensus among fed board members on policy issues and for serving during one of the most severe economic crises of the late 20th century the aftermath of the stock market crash of 1987 after that crash he advocated for sharply slashing interest rates to prevent the economy from sinking into a deep depression 1alan greenspan was awarded the presidential medal of freedom by george w bush making him the only fed chair to receive the award alan greenspan s policies and actionsgreenspan presided over one of the most prosperous periods in american history thanks in no small part supporters feel to his helming of the fed still some of his policies and actions were controversial either at the time or in retrospect early in his career greenspan developed a reputation for being hawkish on inflation in part due to his advocacy for a return to the gold standard in monetary policy in the 1967 essay gold and economic freedom 2his allegedly hawkish stance was portrayed by early critics as a preference for sacrificing economic growth in exchange for preventing inflation greenspan eventually reversed those views as fed chief in a 1998 speech he conceded that the new economy might not be as susceptible to inflation as he had first thought 3in practice greenspan s supposedly hawkish approach was flexible to say the least he was clearly willing to risk inflation under conditions that could create a severe depression and certainly pursued a generally easy money policy relative to his predecessor paul volcker in particular in the early 2000s greenspan presided over cutting interest rates to levels not seen in many decades 4in 2000 greenspan advocated reducing interest rates after the dot com bubble burst he did so again in 2001 after 9 11 the world trade center attack following 9 11 greenspan led the fomc to immediately reduce the fed funds rate from 3 5 to 3 and in the following months he worked toward lowering that rate to a record at the time low of almost 1 00 and holding it there for a full year 4some criticized those rate cuts as having the potential to inflate asset price bubbles in the u s greenspan s pro inflationary policies particularly during this period are today generally understood to have contributed to the u s housing bubble subsequent subprime mortgage financial crisis and the great recession though this is of course disputed by greenspan and his allies 5in a 2004 speech greenspan suggested more homeowners should consider taking out adjustable rate mortgages arms where the interest rate adjusts itself to prevailing market interest rates 6 under greenspan s tenure interest rates subsequently rose as inflation accelerated 4 this increase reset many of those mortgages to much higher payments creating even more distress for many homeowners and exacerbating the impact of that crisis the greenspan put was a monetary policy strategy popular during the 1990s and 2000s under greenspan throughout his reign he attempted to help support the u s economy by actively using the federal funds rate to aggressively lower interest rates to fight the deflation of asset price bubbles the greenspan put created a substantial moral hazard in financial markets informed investors could expect the fed to take predictable actions that would bailout investor s losses which distort the incentives of market participants 7 this created an environment where investors were encouraged to take excessive risk because fed monetary policy tended to inherently limit their potential losses in the event of a market downturn in an analogous way to buying put options on the open market 8