Profile from 2004
Alan Greenspan, Chairman of the Federal Reserve Board, is arguably the most powerful person on the national scene. As we have seen in the past week, his every move, his every word, his every expression is scrutinized, analyzed and fed back to us by the national press.
As we have learned during the terms of the past three presidents, market bubbles up and down, and currency crises here and abroad, this is a man who can truly move markets. At his word, interest rates move up or down. From his position on the Fed, money for economic growth can be put into the economy or taken out to slow down growth. For investors, no other single person’s actions can so quickly raise or lower the value of investment accounts.
As Chairman of the Federal Reserve System Board of Governors, the central bank of the United States, Greenspan oversees a network of twelve Reserve banks scattered across the country along with the Board of Governors and the Federal Open Market Committee.
The Fed’s mission is to ensure a secure banking system for both consumers and the government, foster a healthy economy and keep inflation under control.
The Fed Chairman serves at the whim of the President. Now in his fourth term as Chairman, Greenspan has worked for four Presidents, managing to do his job as apolitically as possible. Despite answering to the sitting President, Greenspan and the Fed are not required to gain the approval of any branch of the government for their decisions. They operate as an autonomous private-sector banking corporation. And while the Fed is a government entity, it does not operate on tax dollars; it meets expenses with interest earned on investments in government securities and bank loans.
Greenspan’s longevity is partly the product of his calm, careful, conservative approach to dealing with the nation’s economy. He prefers the subtle to the heavy-handed approach when solving problems. In part, this could be attributed to his upbringing.
He was a child of the Depression, the son of a stock broker and a retail worker. He parlayed his early love of music into his first job as a clarinet and saxophone player in the Henry Jerome swing band. The $64 a week that he earned enabled him to go back to school at 19 as an economics student at New York University. In the early ’50s, Greenspan, short on cash, dropped out of a doctoral program at Columbia University to become a professional economist. (NYU later conferred his PhD in 1977 without a dissertation.)
He entered politics in 1968 as a member of the Richard Nixon campaign staff. He became Gerald Ford’s top economic advisor during the economic woes of the mid-’70s, continuing to serve in various economy-related posts in the early Reagan years. He was appointed to his current post by President Reagan mere months before the stock market crash of 1987.
Greenspan is currently married to his second wife, NBC News correspondent Andrea Mitchell, and is an avid tennis player. He also spent sixteen years in the inner circle of Ayn Rand and her philosophical group, the Objectivists. Rand, author of The Fountainhead (1943) and Atlas Shrugged (1957), was a conservative thinker who celebrated rugged individualism and capitalism in her works.
It is a tribute to his guidance and leadership that since his appointment to his present position, inflation has fallen, interest rates are at all-time lows, and this nation remains the dominant economic engine of the world.
Alan Greenspan’s term expires at the end of this year. There is much speculation surrounding his eventual replacement if he decides to forego another term. He will certainly be a tough act to follow.