The man who knew, but didn't say: Alan Greenspan (1926-2026)

Published 22 June 2026 · finance

Alan Greenspan’s reputation as head of the US Federal Reserve was legendary — not least because of his reputation for convoluted statements. However, the 2008/9

Alan Greenspan’s reputation as head of the US Federal Reserve was legendary — not least because of his reputation for convoluted statements. However, the 2008/9 financial crisis took a toll on his standing. For many years, the global financial world hung on Alan Greenspan’s words, his facial expressions, and his every movement. Even the thickness of his briefcase was observed, evaluated and interpreted. For nearly 20 years, Alan Greenspan steered United States monetary policy — and with it, the economy — as Chairman of the US central bank, the Federal Reserve, or Fed for short. He was "Mr. Dollar," the guru of the international financial world, the pacemaker of the global economy. George W. Bush awarded him the Presidential Medal of Freedom, and Britiain's Queen Elizabeth II knighted him. He was regarded as upright, brilliant and witty. Greenspan himself liked to say that he began each day with two hours of reading documents in the bathtub, where he was at his most creative. His reputation was flawless. Later, however — after the financial crisis — that would change. But first, a look at the beginning. New Federal Reserve chair holds rates steady To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video The measure of all things When Greenspan took office at the Fed in 1987, the shoes he had to fill were very large. His predecessor, Paul Volcker, had brought galloping inflation under control with a daring high-interest-rate policy. But Greenspan was in no way inferior to Volcker in terms of reputation. Around the turn of the millennium, when he was reappointed for another four years at the head of the Fed, politicians praised him as "the greatest central banker in the history of the world." No wonder: Under his monetary policy leadership, the US economy experienced one of the longest periods of prosperity in its history. Greenspan was a cult figure. Even a furrowed brow would make investors wonder what it meant. Equally legendary were his convoluted and often completely incomprehensible statements, known as "Greenspeak." "Since becoming a central banker, I have learned to mutter with great incoherence," Greenspan told Congress in 1987. "If I seem unduly clear to you, you must have misunderstood what I said." According to Bob Woodward’s biography, Greenspan even phrased his marriage proposal to his second wife, Andrea Mitchell, so incomprehensibly at first that the then 71-year-old had to repeat it.

Greenspan was awarded the Presidential Medal of Freedom by George W. Bush in 2005 Image: Shawn Thew/dpa/picture-alliance Universal remedy: Lower interest rates! Greenspan faced his first major test as Fed Chairman shortly after taking office. After the stock market crash on 19 October 1987, known as "Black Monday," he opened the monetary floodgates to prevent panic among investors. He cut the key interest rate, which had stood at around 7% when he took office. This made loans cheaper, entrepreneurs invest, consumers spend, and the economy got moving again. He also lowered interest rates during later crises — in the 1990–91 recession, the Asian financial crisis of 1997, and the collapse of the Long-Term Capital Management hedge fund in 1998. His actions assured financial markets that the Fed would act decisively in times of crisis. This policy even got its own name: the "Greenspan Put." Shock paralysis after 9/11 When two planes flew into the World Trade Center in New York City on September 11, 2001, the world was thrown into chaos. The economy was in shock. Greenspan reached for his tried-and-tested remedy and lowered the key interest rate in several steps from 6% to 1%. Such a low level had not been seen in the United States for 46 years. It worked: The American economy picked up again, and the Dow Jones index surged more than a third between late 2002 and early 2004. Even though the economy recovered, the Fed kept interest rates at this low level for the following years. Only in 2004 did Greenspan hit the brakes and raise rates. It was too late. Markets did not respond to the rate hikes as usual, and long-term rates actually fell further. Because of those low rates, many Americans had become heavily indebted. Banks had bundled these risky loans and sold them as securities around the world. Even the higher rates could no longer stop the swelling and eventual bursting of the US housing bubble in 2007. A year later, the world was shaken by the financial crisis. The risky behaviour of banks had been encouraged by the deregulation of the financial system in the preceding years. Greenspan not only believed in the power of low interest rates, but also that markets would regulate themselves.