Former US Federal Reserve Chairman Alan Greenspan reportedly died at the age of 100 on Monday. The iconic figure known as “The Maestro” led the US central bank for nearly two decades (1987-2006), the second-longest tenure in history that spanned several of the world’s largest economic booms and busts.
Starting his tenure in 1987, Greenspan was further tested by the “Black Monday” crisis in which the Dow Jones index plunged 22.6% in a single day. During his tenure, he successfully steered the US financial markets through the dotcom bubble of 2000, the impact of September 11, 2001, and the $3.5 billion bailout of Long Term Capital Management (LTCM) in 1998.
Greenspan is best known in global financial history for coining the term “irrational exuberance” in 1996 to warn retail investors about excessive speculation in technology stocks. After the tech market crash, he led a very aggressive monetary easing regime, cutting the benchmark interest rate from 6.5% to a low of 1.0% in two years.
However, the monetary policy he introduced received heavy criticism from macroeconomic experts after the 2008 crisis. Critics accused the low interest rates of being a major cause of the housing market inflating and of encouraging excessive investment risk-taking by Wall Street institutions.
Until the end of his life, he remained vocal about concerns about the risk of a projected surge in the US federal debt. Most recently, his leadership legacy was recently praised and used as a template for guiding the work of the new Fed Chairman, Kevin Warsh.
