1. Alan Greenspan, the 13th chairman of the U.S. Federal Reserve, died on June 22, 2026, at age 100 from complications of Parkinson’s disease. [para. 1] His 18-and-a-half-year tenure was marked by extraordinary prestige initially and later a sharp reversal in public judgment. [para. 2] Appointed by President Ronald Reagan in August 1987, he served five consecutive terms under four presidents, ending in January 2006. [para. 3] Over his tenure, he confronted core questions of modern central banking, including setting monetary policy in a changing economy and responding to financial crises. [para. 4]
2. At the height of his reputation, Greenspan was celebrated for keeping interest rates low during the internet economy and for presiding over the Great Moderation, though critics later argued he was a beneficiary of a favorable era. [para. 5] His most controversial conviction was a faith in financial deregulation: he supported repealing the Glass-Steagall Act, championed financial innovation, and helped block regulation of over-the-counter derivatives. [para. 6] During the 2008 financial crisis, he acknowledged before Congress that he had “made a mistake” in assuming banks would protect their shareholders. [para. 7]
3. Greenspan’s influence on central banking remained after his death. [para. 9] At the time of his passing, Fed Chair Kevin Warsh faced echoes of Greenspan’s “irrational exuberance,” with an AI investment boom and geopolitical shocks unsettling markets. [para. 10] Warsh kept interest rates unchanged and shortened the Fed’s policy statement, moving away from forward guidance. [para. 11] Economist Lu Ting noted that Warsh’s communication strategy—radical minimalism—differed from Greenspan’s constructive ambiguity, which used dense language to preserve policy discretion. [para. 12] Political pressure on the Fed also recurred: in early 2026, Greenspan joined former Fed chairs in warning that attacks on the central bank’s independence by President Donald Trump could erode confidence. [para. 13]
4. Greenspan was born in March 1926 in New York to a Jewish immigrant family. [para. 14] He first studied clarinet and saxophone at Juilliard, then turned to economics at New York University in 1945, aligning later with Milton Friedman’s monetarism. [para. 15][para. 16] After working as an economic analyst, he co-founded a consulting firm in 1953 and joined Ayn Rand’s inner circle. [para. 17][para. 18] He moved into policy as chairman of the Council of Economic Advisers under President Gerald Ford in 1974, and later chaired the National Commission on Social Security Reform under Reagan. [para. 19][para. 20]
5. Taking over the Fed in August 1987, Greenspan raised the discount rate to address deficits and inflation. [para. 21] After the Black Monday stock market crash in October 1987, he issued a statement providing liquidity to support the financial system; markets recovered, creating the “Greenspan put” expectation that the Fed would support markets during turmoil. [para. 22][para. 23] He repeated this playbook during the 1994 Mexican peso crisis, the 1997 Asian financial crisis, and the 1998 collapse of Long-Term Capital Management. [para. 24] Critics argued that repeated market support distorted risk pricing and required larger interventions later. [para. 26][para. 27]
6. On December 5, 1996, Greenspan famously asked whether “irrational exuberance” had driven asset values too high. [para. 28] Despite the warning, he persuaded the Federal Open Market Committee not to raise rates three months earlier, believing productivity gains were undercounted. [para. 29] His era was marked by easy monetary conditions, cheap imports keeping inflation low, and asset bubbles building beneath the surface. [para. 31] After he left office, the subprime crisis in 2007 exposed the costs of his policies, including a low-rate environment and deregulation. [para. 32][para. 33] Greenspan had ignored warnings about subprime risks and curbed the Commodity Futures Trading Commission’s authority over derivatives. [para. 34][para. 35]
7. Economist Lu Ting noted Greenspan believed market participants were rational and would manage risk better than regulators. [para. 36] Xia Chun said the prevailing belief in self-correcting markets ignored realities of corporate governance and short-term incentives. [para. 38] Today’s global frameworks of macroprudential regulation are essentially patches for the loopholes of the Greenspan era. [para. 39] His legacy ultimately embodied the golden age of global finance—extraordinary openness and innovation—with an enduring lesson that prosperity and risk are inseparable. [para. 40]
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