Alan Greenspan, the economist who steered the United States Federal Reserve for nearly two decades and became one of the most consequential – and contested – figures in the history of American monetary policy, died Monday at his home in Washington. He was 100.
His wife, Andrea Mitchell, a veteran correspondent with NBC News, confirmed that Greenspan died from complications of Parkinson's disease.
"He was a giant of a man who helped shape the US economy for decades under presidents of both parties, but was always honest in acknowledging his mistakes," Mitchell said in a statement.
Greenspan served as the 13th chairman of the Federal Reserve from August 1987 to January 2006, first appointed by President Ronald Reagan and reappointed by three successive presidents: George H.W. Bush, Bill Clinton, and George W. Bush. His tenure was the second-longest in the position's history, behind only William McChesney Martin.
In a statement, the Fed noted his passing "with deep sadness" Monday, adding that his contributions to monetary policy "left a lasting mark on this institution, on the broader field of economics, and on the country."
Greenspan arrived at the Fed just two months before Black Monday – the October 1987 stock market crash in which the Dow Jones Industrial Average collapsed by nearly 23% in a single session, still the largest single-day percentage decline in the index's history. His swift response – issuing a terse statement of central bank support and flooding the financial system with liquidity – averted a deeper crisis and set the tone for his tenure.
He became known as "the Maestro" as he presided over one of the longest economic expansions in US history, a boom stretching from 1991 to 2001, helping define what supporters described as modern American capitalism from the final years of the Cold War through the dawn of the digital age.
Central to that prosperity was a pivotal judgment Greenspan made in the mid-1990s. Rather than following conventional wisdom that falling unemployment would ignite inflation – and raising interest rates accordingly – he kept borrowing costs low, betting that a surge in worker productivity would keep price pressures contained. That call proved correct and remains a touchstone for policymakers, with former Fed Chair Jerome Powell citing it as an example of how informed judgment can outperform rigid economic models.
It was in a December 1996 speech at the American Enterprise Institute in Washington that Greenspan coined a phrase that would become part of the wider financial lexicon. After his question on how policymakers could determine "when irrational exuberance has unduly escalated asset values" sent temporary shivers through global stock markets, he later pulled back from the comment, which ultimately seemed prescient and early as the dot-com bubble burst until 2001.
Market observers noticed a recurring pattern during Greenspan's tenure, as the Fed appeared to develop a policy of supporting equity investors by injecting liquidity into the economy during large market downturns.
This perceived tendency – rooted in the Fed's response to the 1987 crash, the 1998 collapse of hedge fund Long-Term Capital Management, and the aftermath of the September 11, 2001, attacks – came to be called the "Greenspan put," referring to an implicit floor under markets created by the expectation of Fed intervention.
Critics argued that backstop encouraged financial institutions to take on increasingly aggressive risk. In testimony before the House Committee on Oversight and Government Reform in October 2008, Greenspan admitted to being "shocked" that his faith in the self-correcting discipline of markets had proved wrong.
"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself included, are in a state of shocked disbelief," he told lawmakers.
The bipartisan Financial Crisis Inquiry Commission determined in 2011 that the 2007–2008 crisis was triggered in part by Greenspan's failure to discourage trade in securities backed by subprime mortgage loans and his promotion of financial industry deregulation.
Greenspan was born March 6, 1926, in the Washington Heights neighborhood of New York City. In his early years he attended the Juilliard School and played jazz saxophone and clarinet in a band before turning to economics at New York University, where he eventually earned a PhD. He was known for doing his most intensive thinking in the bathtub, sometimes for two hours at a stretch, drafting speeches and working through economic data.
After leaving the Fed in January 2006, Greenspan ran his own consulting firm, Greenspan Associates, dispensing advice to Wall Street clients and collecting speaking fees.
In January, months before his death, he co-signed a statement criticizing the Trump administration's investigation of then-Fed Chair Powell as "an unprecedented attempt to use prosecutorial attacks to undermine" the central bank's independence.
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