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(REUTERS)
Alan Greenspan, hailed as the greatest Federal Reserve chairman when he retired in 2006, died on Monday aged 100, NBC News reported.
Greenspan, who exerted a powerful influence on the US economy during his tenure at the helm of the Fed from August 1987 to January 2006, died at his home from complications of Parkinson's Disease, NBC reported, citing his wife Andrea Mitchell, who is the outlet's chief Washington correspondent.
Greenspan oversaw the second-longest economic expansion in US history, an uninterrupted decade of growth from March 1991 to March 2001. His decision to let the economy run - despite pressure to raise interest rates against an inflation threat that never materialised - helped foster years of US prosperity and earned him rock star status as an economic “maestro.”
The era was marked by his prescient judgment that a productivity surge in the mid-1990s would keep inflation contained.
His intuition in that moment is still a touchstone for policymakers, and has been referred to by former Fed Chair Jerome Powell as an example of how judgment can sometimes outperform technical models of the economy.
However, the one-time jazz musician's monetary policy acumen later came into question as critics attacked his policies for fueling a series of asset price bubbles and laying the groundwork for the 2007-2009 financial crisis.
“I think the deification that came just before the financial crisis was never really deserved, and I think the lambasting that he took after he left was never fully deserved either,” said Stephen Oliner, a former senior Fed official.
Greenspan, who fell in love with math through an obsession with baseball statistics, won quick plaudits for a strong response to the Black Monday stock market crash of 1987, just two months after he took office.
He also steered the US economy through the 1990-91 recession, the 1997-98 Asian and Russian financial contagion, the collapse of the dot-com stocks bubble in 2000, and the turbulent economic aftermath of the September 11, 2001 attacks.
Along the way, biographer Sebastian Mallaby detailed, he became a consummate Washington power player able to leaders into making the decisions he felt were best.
At the Fed's vaunted Jackson Hole gathering in 2005, two leading economists billed him as perhaps the greatest central banker of all time. But when the housing price bubble that had grown during his final four years in office finally burst, it savaged his once-stellar reputation - along with the global economy.
The second-longest-serving fed chair behind William McChesney Martin, Greenspan was first tapped by President Ronald Reagan in 1987 and was later re-appointed by Presidents George H.W. Bush, Bill Clinton, and George W. Bush.
He was 80 when he left the Fed in 2006 but moved smoothly into a new career as a consultant and advisor with his own firm, Greenspan Associates, offering insights on where he thought the economy was going.
90s Boom
At the Fed, Greenspan built on the successes of his predecessor, Paul Volcker, who stamped out the raging inflation of the late 1970s and early 1980s. Indeed, in his final few years at the central bank Greenspan spent more time worrying about the risks of deflation taking hold than about high inflation re-emerging.
Greenspan was often referred to as the second most powerful person in the country, after the president, because of the central bank's ability to influence the economy through changes in short-term interest rates. Pensive, serious and quiet, he laid out his views in elliptical testimonies and speeches that were parsed endlessly by pundits.
He once warned an economists' group that he spent a lot of his time worrying about being too clear: "What I've learned at the Fed is a new language called 'Fed speak.' We learn to mumble with great incoherence,” he said.
Music Came First
Born in New York City on March 6, 1926, Greenspan was the only child of Rose and Herbert Greenspan. His parents divorced when he was young and he was raised in a small apartment in the Washington Heights section of New York with his mother and grandparents.
Greenspan's first love was music and he spent two years at New York's Juilliard School studying the clarinet. He toured briefly with a swing band as a saxophone player before turning to economics studies at New York University.
In his youth, Greenspan was a friend and associate of the novelist Ayn Rand, who espoused the supremacy of the free markets and the profit motive in books such as “Atlas Shrugged” and “The Fountainhead.”
Before his Fed years, he chaired the Council of Economic Advisers under President Gerald Ford in the 1970s. He also ran an economics consulting firm called Townsend-Greenspan and Co. for years.
When Greenspan succeeded Volcker, some worried he might not live up to his tough-minded, cigar-chomping predecessor.
But Greenspan soon proved his mettle by pumping liquidity into financial markets to calm the October 1987 stocks crash. His quick action, which is now seen as a textbook example of how to handle such crises, was credited with staving off a recession.
