He finally retired from the Federal Reserve Board on January 31, 2006 and transferred his powers to the next Chairman, Ben Bernanke . Alan Greenspan earned a name for himself with his outstanding maneuvering of the Black Monday stock exchange crash when he was just a freshman as Chairman of the Federal Reserve Board. He also proved himself a good manager with his splendid handling of the dot. com boom during the 1990s economic heydays. The following paragraphs explain further his life, his economic theories and his accomplishments as chairman of the United States Federal Reserve Board (Faux, 1).
As Chairman of the Federal Reserve Board, he took good care of the effects brought about by the stock market bubble debacle during March of the year 2000. He then executed well during the recession that hit the United States during the 2000 to 2002 period. Alan Greenspan has been acknowledged as one of the stalwarts in the field of economic theory in the American society. His economic policies are still reverberating to many corners of the United States until today despite his retirement as Chairman of the Federal Reserves Board of the United States( Blinder, 1).
He was born of Hungarian Jew Parents in Washington Heights, N. Y. He finished his Clarinet Course in the Juilliard School between the years 1943 and 1944 (Milligan, 1). He studied for his B. S. Economics diploma in New York University. He graduated with honours in 1950. He further studied for his Master in Arts in Economics in Columbia University in 1950. Unfortunately, he was not able to finish his graduate studies. He was later conferred his master s degree without thesis by the same school in 1977 and a doctor in philosophy major in Economics later in December, 2005 (Greenspan, 1).
Alan Greenspan worked as an economic adviser in the Conference Board of New York City which advices businessmen on business and economic matters. This was his job from the years 1948 to 1953. Alan Green Span had worked as a member of the board of directors in many companies like the Capital Cities/ABC, Inc. , General Foods, Inc. , J. P. Morgan & Co. , Inc. , Automatic Data Processing, Inc. , Aluminum Company of America, Pittston Company among the other jobs he had held. He married twice. His first marriage was with Joan Mitchell in 1952.
This marriage lasted only for one year. He again married the media personality Barbara Walters in during the 1970s. His third wife was Andrea Mitchell who was twenty years younger than him during their marriage in 1997 (Greenspan, 1). His economic theories Alan Greenspan believed in Objectivism. He was convinced of this theory by Ayn Rand who died some time later. Alan Greenspan had espoused this objectivism theory between the years 1950 to 1970. Alan Greenspan was very vocal of his economic favorite called laissez Faire capitalism theory.
Further, Alan Greenspan believes that the United States government must set up the environment to entice both the buyers and the sellers to freely do a selling a buying activity with the least interference from the government. He had infused his Objectivism philosophy into his economic theories. He emphasized that the Gold should be the foundation of the United States economy even though the United States economy is centered on the fiat money system with the influence of inflation affecting the increase in the prices of basic goods and necessities (Jones, 1).
Likewise, many objectivists complained that his stint as chairman of the federal reserves board had made him throw away to the dust bin his objectivist as well as his free market economy. Many complained that he was now acting like a puppet of the United States president doing what the president commands him to do. Thus, he answered their charges by stating that every person who is a buyer or a seller has economic freedom. Meaning, the seller can sell as high a price as he could offer. On the other hand, the buyer has the freedom to buy as low a price as he could bid.
In the end, both the buyers and the sellers will have to meet halfway and this called meeting price is the equilibrium price. Another term for this equilibrium amount is market price (Lapp, Douglass, Laksanasut, 1). This is what he answered as his basic economic theory in defense of his principles. In fact, he stated that his personal views and theories of economics had to budge a little to give way to all pressures brought about by the different affected sectors of the monetary public as Chairman of the Federal Reserves Board.
He even insists the United States economy will do excellently without the interference of the United States Central Bank if the gold standard is put into place. For, he explains that the United States paper bills and coins are backed by their equivalent amount in gold bullions stocked safely within the fortified vaults of the United States Central Bank. In terms of mortgage negotiations, Alan Greenspan prodded the usual players in the mortgage industry to increase the types of mortgages in order to encourage more people to happily venture into the mortgage loan business (Tuccille, 1).
His term as chairman of The Federal Reserve. Alan Greenspans appointment as the Chairman of the Federal Reserves Bank in 1987 by then President Ronald Reagan was made to replace the retiring Paul Volcker. The United States senators immediately approved his nomination to this prestigious and at the same time precarious position. For, the eyes of the financial community within the United States as well as its business contacts outside America are constantly on their toes watching every move Alan Greenspan makes (Tuccille, 1).
His mental and physical aptitude was immediately put to the test when the bond market was harassed by a one day decline in the bond market price which had only occurred for the first time five years age. Also, the stock market crash in 1987 had the United States economy pushed against the wall. Alan Greenspan successful fought out these two debacles when he stated that the Federal government stands firm in its resolve to aid any American business that needs immediate money to keep their business going until the rarely rough situation will simmer down to tranquil and predictable economic conditions.
In resolve, Alan Greenspan rode the rough economic difficulties by decreasing the value of the United States dollar. Further, he camouflaged his every action and reaction to any economic and business situation by using speeches that were so blurred as the chairman of the Federal Reserves Board. His blurred speeches were his technique of keeping his detractors off -guard because they could not understand the real meanings behind his speeches. For, he did this to give him an added advantage.
For example, he declared in one of his famous speeches that if a person feels that he or she understands fully the meaning of Alan Greenspans speeches, then this person is actually misunderstanding the speaker (Tuccille, 1). He admits his being misunderstood by the general public will give him enough flexibility to remedy any economic situation before the public finally comes around to fully comprehend what Alan Greenspans real intentions are.
In fact, Alan Greenspan never explained to the public the relation of both the inflation rate and the current economic conditions to his decision as chairman of the Federal Reserves Board to decrease the interest rates. Definitely, the interest rates will consequently affect the increase or decrease in the number of loans transacted through the banks and other financial intermediaries. He had also orchestrated the increase in the credibility of the financial markets in his desire to beat inflation (Greenspan, 1). For, Alan Greenspan believes that the unemployment rate is greatly influenced by inflation.
As inflation increases, then there is a higher probability that many workers will be retrenched. Finally, as chairman of the Federal Reserves Board, he was instrumental in beating recession with his extra efforts pursued to lower the interest rate within the United States. In fact, Alan Greenspan was instrumental in lowering the interest rate from 3. 5% to only 3. 0 percent to soften the impact of the September 11, 2001 twin towers plane attacks. This reduction rippled economically causing an increase in the houses sold as well as increases in the refinancing industry (Blinder, 1).
Alan Greenspan believed in Objectivism. Alan Greenspan was very vocal of his economic favorite called laissez Faire capitalism. Alan Greenspan sailed smoothly through the rough times in terms of economic debacles Further, he camouflaged his every action and reaction to any economic and business situation by using speeches that were so blurred during his stay as the chairman of the Federal Reserves Board. Conclusively, he was very instrumental in bringing the Unites States high above the murky workers of inflation, recession and unemployment.