Greenspan was born in Haizi, Upper Manhattan on March 6, 1926. Greenspan's parents divorced when he was very young, and he was raised by his mother.
During his stay at George Washington College (which is also Henry Kissinger's alma mater), Allen showed his mathematical genius, but his first talk was about music. In the mid-1940s, he received two years' training at the famous Gillard School in new york. Because of his excellent skills in playing bass clarinet and saxophone, he joined Jerome Swing Band and became a jazz musician.
But he is surrounded by professional musicians, and he feels inferior in front of these super geniuses. He began to doubt the future of his music career. At that time, the brilliant Greenspan always hid in the corner and chewed a lot of economic and financial books at halftime. After touring for a year, he left the band and began to study business economics at new york University.
Economics, like a decent coat, is very suitable for Greenspan. Graduated with the highest honors from 1948 and obtained a bachelor's degree. Two years later, he continued to study for a master's degree in economics at new york University, and then went to Columbia University to study for a doctorate in economics. While studying at Columbia University, he married the painter Joan Mitchell. At this time, he and the famous economist arthur burns were engaged in research work and became close friends.
By 1954, Greenspan's marriage was terminated, and he also interrupted his doctoral program at Columbia University. Despite repeated setbacks, he is still in the fast lane. At the age of 28, he and an elderly new york bond trader named William Tucson co-founded a consulting company: Tucson-Greenspan. For the next 20 years, Greenspan regarded this company as his professional base. 1958 after Tucson's death, he took over the leadership of the company, expanded his business and developed a number of influential customers in the fields of finance and manufacturing. At the same time, Greenspan also created a novel and profitable little world for himself, that is, providing economic analysis opinions for senior managers of enterprises. As a Fed official later said, "He was the first person to provide a forecast to the CEO." This kind of work is not only challenging in thinking, but also especially suitable for Greenspan to exert his personal talents and make him a rich man.
It was not until 1977 that Greenspan received his doctorate in economics from new york University. If someone treats the chairman of the Federal Reserve as a professor, he will be surprised to hear this. Although he has not dealt with books for 25 years, it is extremely valuable to him. As an economic consultant, he learned how to use complex quantitative techniques to predict and analyze macroeconomic and microeconomic trends. At the same time, he created a unique analysis method of "starting from the grassroots", which became his symbol in the Federal Reserve.
For people outside this mysterious field, it is hard to say how unique Greenspan's methodology is. He starts with the smallest details, such as inventory and product delivery time. He studied many figures until he saw the appearance of a big outline. A friend of his once said with a slight exaggeration: "Greenspan is such a person. He knows how many flat-headed bolts were used in the Chevrolet car made in 1964, and he also knows what impact it will have on the national economy if three are removed. "
Greenspan 1968 began to set foot in politics. 1In the summer of 974, Herbert Stein told President Nixon that he didn't want to continue to be the director of the Council of Economic Advisers, and the White House considered hiring Greenspan for this position. But Greenspan was determined not to do so. It can be seen that he loves his job in Tucson-Greenspan and doesn't want the company to lose such a strong leader. At this time, arthur burns, Greenspan's mentor and friend at Columbia University, stepped forward and made suggestions for his old classmates and friends. Burns has been the chairman of the Federal Reserve since 1970. He told Greenspan: Tucson-Greenspan Company has been established for 20 years. If you can't operate without a founder at this time, it can only show that the company has serious problems. Greenspan thought Burns's analysis was serious and agreed to take up the post.
Greenspan was the first "commercial economist" to hold the important position of director of the Council of Economic Advisers, and he soon found that he had to deal with many business challenges. The bigger challenge he faces is after 13 years.
From 65438 to 0987, Greenspan served as chairman of the Federal Reserve Board of Directors. As soon as his appointment was announced, the Dow Jones index fell by 22 points. Bond prices fell even more, falling to a five-year low in one day. In Tokyo, the exchange rate of the United States against the Japanese yen dropped from 1: 145 to1:142.5; In Paris, the exchange rate of the United States against the French franc fell by 2%.
The new chairman of the Federal Reserve must deal with inflation immediately. In July, the price of crude oil fell to 1 1 USD per barrel; In August this year, oil prices soared to $22 a barrel. The soaring price and other inflationary pressures prompted the Federal Reserve to increase the discount rate by 0.5 percentage points on September 4th. 1987.
This is the first interest rate adjustment in more than a year, and it is also the first interest rate increase since the spring of 1984. In fact, since 1984, the Fed has cut interest rates seven times, from 90% to 5.5%. Most economic authorities believe that raising interest rates in September obviously means that the Federal Reserve chaired by Greenspan should seriously deal with inflation.
However, crises are everywhere, one after another. After a week of heavy losses, the stock market fell by 508 points (to 1738.74) on 10 and 19-which soon became the infamous "Black Monday", resulting in a book loss of up to 500 billion dollars. The percentage of decline on this day was 22.6%, which was twice that of the famous Black Tuesday 1929 during the Great Depression. For most observers, this time is really terrible. This requires a leader with decisive decision-making ability to shoulder this heavy responsibility and turn the tide, and this person sitting in the high position of the chairman of the Federal Reserve is the least experienced in people's memory.
However, in the face of challenges, Greenspan stepped forward. Just after 4 pm, Greenspan stepped off the plane in Dallas and the closing bell rang, which prevented Wall Street from suffering further losses. A panicked Fed official told Greenspan that the market closed down 508 points. Greenspan was shocked at the time, but he reacted immediately. He should have heard 508 points instead of 5.08 points. He immediately canceled the scheduled speech and flew back to Washington. He held an emergency meeting that night to study the countermeasures against the crisis with his advisers and made a crucial decision. Less than an hour before the market opened on Tuesday, he issued the following brief statement: "The Federal Reserve, in accordance with its duties as the national central bank, today reaffirms that it is ready to play the role of repayment source and support the economic and financial system."
In other words, the Fed will inject funds into the financial system as needed to prevent financial collapse. In other words, the urgency of dealing with the crisis has far exceeded the policy of tightening monetary policy. Although this is inconsistent with Greenspan's past claims, as Emerson said, "stupid policy consistency is a short-sighted approach." Greenspan is not stupid.
In the golden age of the past, once this happened, as long as financial giants like Morgan walked into the stock exchange and signed big orders in public, they could stop the panic. The meaning is clear: there is nothing to be afraid of. Now, the Federal Reserve was established in the year of Morgan's death. It has become his successor in many ways, and it is also intervening in the economy through similar symbolic means to stabilize investors. Greenspan, who has studied economic history all his life, knows Morgan and his intervention methods like the back of his hand. More precisely, he also learned about the tragedy in American financial history from 1929- 1933. At that time, it was precisely because the central bank foolishly tightened the monetary policy that it pushed the already battered stock market into the abyss of the Great Depression. Therefore, when some of his advisers were thinking hard about what to do, Greenspan said without hesitation: "Anyone who knows economic history will understand that if the stock market falls by 500 percentage points or 20%, there will definitely be big problems in the economy. At this time, what we should consider is not whether to inject capital into the market, but how to inject it. quot
The market soon calmed down. In just a few months, people recovered all the losses suffered by Black Monday. As described by Forbes Daily, "This is Greenspan's most brilliant moment. He raised his horn and told the bank to lend money to Wall Street, and then lowered the short-term interest rate and the long-term interest rate. "
This kind of effective intervention is only the beginning for Greenspan. A few months after the stock market crash, the Federal Reserve raised interest rates again, which was an amazing move and sent two related messages: First, Greenspan has made up his mind to curb inflation; Secondly, he thinks that the stock market crash of 1987 is not so much a crisis as an adjustment to the economy. He is far-sighted and will not let short-term fluctuations affect the long-term sustained economic growth. Thanks largely to Greenspan's decision, there was no economic depression after the stock market fell. Fortunately, the stock market crash of 1987 did not repeat the tragedy of 1929.
After winning in the economic field, Greenspan is now facing a major political test. Conservative Republican President George Bush is seeking re-election. Most pessimistic Washington insiders predict that alan greenspan, a conservative and Republican, will not take any action to support Bush on interest rates, although it is obvious that under the pressure of inflation at that time, interest rates need to be raised again. At this time, Greenspan's even more amazing measures were introduced. A few weeks before the National Congress of the Communist Party of China, the Federal Reserve raised the discount rate by 50 basis points (a full 50% increase), which almost suffocated the already depressed economy.
What does this mean? First of all, although the chairman of the Federal Reserve is still inexperienced, he has never been controlled by anyone and has never received any favors. Secondly, his vision is far beyond that of politicians, because politicians can only see the next election as much as possible. Greenspan often takes pains to say: Our goal is to achieve maximum sustainable growth.
During 1990, the economy slipped into a mild recession. Many economists and investors accuse the Federal Reserve controlled by Greenspan of being too slow to take action after finding problems with economic indicators (the Federal Reserve did not lower interest rates until 12). However, by 1992, the economy has grown substantially, while the inflation rate and unemployment rate are still very low. While others are gloating and talking about it, Greenspan has cast his eyes further. He concluded that maximum sustainable growth was in danger. The Federal Reserve predicted that the tight labor market would trigger inflation within a year or so, so it began to raise interest rates from June 65438 to July 0992. This is the so-called "preemptive strike" of inflation.
From Wall Street to towns, there are different views on Greenspan. Many people regard him as an annoying wet blanket: the economy was developing very well, but it was suppressed by excessive fear of inflation. Trade unions only want to raise workers' wages and increase employment opportunities, so they call the Fed an anti-inflation fighter. However, the Fed continued to raise interest rates and adjusted them five times. From the lowest point of 3% in July to the highest point of 5.25% in February, 1995. Meanwhile, the economy continues to grow. Pre-emptive strike does ensure the maximum sustainable economic growth, and Greenspan's theory has been verified.
Thanks to Greenspan's efforts, the economic situation in the United States is improving day by day. 1at the beginning of 999, the American economy developed at an annual growth rate of 5%, while the unemployment rate fell to the lowest point in 28 years. In this way, people pay more attention to everything he says. Even mature people began to look for the subtext from Chairman Asako's speech, testimony and attitude: What would he do? What can't he do?
Rationally speaking, we should really analyze Greenspan's worldview completely, because he has had too much influence on the world. We should also have a more comprehensive understanding of what the world thinks of him and their reaction to his ideas. It's time for us to understand the Greenspan effect.