Economist
and chairman of the Federal Reserve Board.
Born March 6, 1926, in New York City. Considered by many to
be the second most powerful man in the United States, Greenspan
has headed the seven-member board since 1987, doggedly fighting
to keep inflation down and increase consumer confidence in
the economy.
Raised
by his mother and grandmother in the Washington Heights
section of Manhattan, Greenspan actively pursued his interest
in music. After graduating from high school, he studied
at the Juilliard School and spent a year travelling with
the Henry Jerome Band as a tenor saxophone and clarinet
player. From 1944 to 1948, he attended New York University’s
School of Commerce, graduating summa cum laude with a degree
in economics. He earned his M.A. in 1950, but left before
finishing his doctorate—he ultimately received his
Ph.D. in 1977—to form an economic consulting firm,
Townsend-Greenspan, with the bond trader William Townsend.
Townsend served as president of the company until his death
in 1958, when Greenspan became its president and principal
owner.
In 1952,
Greenspan married Joan Mitchell, a painter. Their marriage
was annulled after only a year, but it was she who introduced
him to Ayn Rand, the novelist and social philosopher. Greenspan,
who remained friends with Rand until her death in 1982,
was greatly influenced by her philosophy of “Objectivism,”
or the pursuit of economic self-interest to the exclusion
of the interests of society as a whole.
Greenspan
entered politics for the first time in1967, when he served
as director of domestic policy research for Richard M. Nixon’s
successful presidential campaign. Though he turned down
a permanent position in the Nixon administration, he served
as part of the President-elect’s transition team and
advised him informally while continuing his work at Townsend-Greenspan
in New York. In 1974, during Nixon’s second term, Greenspan
accepted a position as chairman of the Council of Economic
Advisers, reportedly motivated by an appeal to his sense
of patriotic responsibility to combat the rising inflation
that was threatening the capitalist economy. He took office
on September 1, 1974, less than a month after Nixon’s
resignation.
When
Jimmy Carter defeated Gerald R. Ford in 1976, Greenspan
returned to New York and Townsend-Greenspan. From 1981 to
1983, during Ronald Reagan’s first term, he served
as chairman of the National Commission on Social Security
Reform, working to save the ailing social security system
from bankruptcy. When Paul Volcker, the chairman of the
Federal Reserve Board, unexpectedly announced his retirement
in June 1987, Reagan nominated Greenspan as his replacement.
Greenspan accepted the nomination and dissolved Townsend-Greenspan
after failing to find a suitable buyer for the company.
He was confirmed by the U.S. Senate and took office on August
11, 1987.
From
the beginning, Greenspan earned praise and respect from
the financial community for his steadfast pursuit of a tight-money
policy in order to combat inflation and encourage employment
and consumer confidence. He weathered his first major crisis—October
19, 1987, the so-called “Black Friday,” when the
Dow Jones Industrial Average plummeted by 508 points—by
a timely reversal of the tight-money policy and an offering
of reassurance to the stock market that the Fed would provide
it with the necessary aid to get it back on its feet.
The
market crash caused far less damage in the long term than
Greenspan had originally expected, and he soon concentrated
once again on fighting inflation. A moderate Republican
who advocates deregulation, Greenspan stayed on at the Fed
after George Bush’s loss to Bill Clinton in the 1992
election and built a good working relationship with the
Democratic administration. He began his third four-year
term in June 1996, and his influence over the global economy
only increased as his tenure continued. In late 1996, he
triggered a global sell-off of stock simply by suggesting
in a speech that share prices were too high. In 1998, faced
with economic trouble in Latin America, Russia, and Asia
threatened the U.S. economy, Greenspan eschewed the traditional
response—an interest rate hike—and instead convinced
his Fed colleagues to support three rate cuts. The unpredictable
move met with success, and the U.S. had averted a damaging
recession. Greenspan’s collaboration with Treasury
Secretary Robert Rubin inspired a great deal of confidence
in the national economy—in 1998, unemployment reached
a 24-year low, inflation hit an 11-year low, and consumer
confidence was the highest it had been in 30 years.
In 1999,
debate began among Presidential hopefuls regarding the future
of the Fed chairman, whose term expires in June 2000. On
October 28, 1999, in a speech to a a group of Florida businessmen,
Greenspan stated without ambiguity that the American economy’s
current rate of growth is not sustainable, and warned that
job growth must slow down in order for inflation to stay
under control. As usual, his pronouncement caused a stir
in the financial community, as many wondered whether Greenspan
would again raise interest rates.
Greenspan,
who once dated television journalist Barbara Walters, married
Andrea Mitchell, NBC’s chief foreign affairs correspondent,
in 1997, after a 12-year relationship. They live in the
Palisades neighborhood of Washington, D.C. Greenspan, who
suffers from back pain, is famous for doing a good deal
of his most important work in the mornings, while soaking
in his bathtub.
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