Why Alan Greenspan Is Key to Understanding Today’s Fed

**Ryan Knutson** (0:06)
Alan Greenspan, the former Federal Reserve Chairman, wasn't what you'd call traditionally handsome. He wore thick glasses, he was balding, and yet he was kind of a ladies' man.
Greenspan dated Barbara Walters back in the 1970s. Yes, that Barbara Walters, the famous newscaster.

**Nick Timiraos** (0:28)
And she later wrote about him, that he wasn't the sort of man you would notice when he walked into the room. She would have to reintroduce him to friends because they wouldn't remember who he was. But he sort of became a player in the New York and Washington social scene.

**Ryan Knutson** (0:42)
Alan Greenspan went on to become a towering figure in modern finance. He died this week at the age of 100

**SPEAKER_3** (0:50)
Alan Greenspan served as chairman of the Federal Reserve for nearly two decades.

**SPEAKER_4** (0:55)
Alan Greenspan, he led the chair for five terms under four presidents.

**SPEAKER_5** (0:59)
Today it's my pleasure to welcome Alan Greenspan. During his tenure, he has inspired confidence and for good reason.

**SPEAKER_6** (1:05)
The era of Chairman Greenspan will always be known as one of phenomenal economic growth.

**Ryan Knutson** (1:11)
Our colleague Nick Timiraos, who covers the Fed, says that even though Greenspan retired two decades ago, his ideas are gaining traction in Washington again.

**Nick Timiraos** (1:21)
If we were recording this episode two years ago and you asked me, well, what is the example of Alan Greenspan mean for today? I would have had a much different answer than I do now because we now have a Fed chair who is pointing exactly to what he thinks the Fed should be, which is Alan Greenspan.

**SPEAKER_7** (1:41)
Clarence, we need a really good oath delivered here, okay? Thank you very much. Thank you.

**Ryan Knutson** (1:49)
Last month, in a ceremony at the White House, Kevin Warsh was sworn in as the new Fed chair.

**SPEAKER_5** (1:55)
I do solemnly swear.

**Kevin Warsh** (1:57)
I, Kevin Warsh, do solemnly swear.

**Nick Timiraos** (2:02)
Kevin Warsh said at the swearing in, he wants to restore the Fed to what it was under Alan Greenspan.

**Kevin Warsh** (2:09)
Like Alan, I intend to fill the role of chairman with energy and purpose, just the way Chairman Greenspan did, faithful to the mission and the very best traditions of the Fed.

**Nick Timiraos** (2:24)
If you care about how this new Fed is going to do business, then you definitely want to spend some time getting to understand the Fed as it operated under Alan Greenspan.

**Ryan Knutson** (2:40)
Welcome to The Journal, our show about money, business, and power.
I'm Ryan Knutson. It's Wednesday, June 24th.

**SPEAKER_9** (3:07)
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**Ryan Knutson** (3:46)
When Alan Greenspan was young, it was far from obvious that he'd go into economics.

**Nick Timiraos** (3:51)
He was raised by his mother in Washington Heights in Manhattan. He was a musician. He studied at Juilliard. He played with jazz bands during World War II.

**Ryan Knutson** (4:01)
Bebop jazz, to be exact. Green's band played the saxophone, but he also followed the beat of his own drum.

**Nick Timiraos** (4:10)
He was a nerd.
You know, when his bandmates, when they were taking their breaks, they would go off and smoke cigarettes or pot. And Alan Greenspan would go read biographies at JP Morgan. And he later wrote that he'd much rather be reading about iron ore deposits in South America than gone with the wind. So he was interested in the nuts and bolts of what made the economy move.

**Ryan Knutson** (4:39)
Greenspan had always loved math. And after reading all those biographies on his own, he eventually studied economics at New York University.

**Alan Greenspan** (4:46)
The best economic decision I ever made in my life was to decide to leave the music business and go into economics.

**Ryan Knutson** (4:53)
In the 1950s, he started his own business forecasting firm. Greenspan earned a reputation as an analytical whiz, who could pore over data and accurately figure out when an industry was on an upswing or about to hit a slump.

**Nick Timiraos** (5:06)
It made a tidy sum, selling his insights about the business cycle to the biggest CEOs and US businesses in the country.

**Ryan Knutson** (5:17)
Greenspan was a libertarian who believed in free markets and was close friends with Ayn Rand, the famous philosopher and writer. In his younger years, he was a big critic of the central bank. According to one biography, he called it one of the quote, historic disasters in American history.