Entitlement programs crowding out domestic savings, slowing productivity growth: Alan Greenspan
Former Federal Reserve chairman Alan Greenspan discusses the economic backdrop, the crowding out of domestic savings by government entitlement spending and the impact coronavirus will have on the U.S. economy as well as interest rates and inflation.
Alan Greenspan is a former Federal Reserve chairman who led the U.S. central bank for almost two decades, guiding the U.S. economy through the 1987 stock-market crash and presiding over a period of booming growth in the 1990s up until the global financial crisis.
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But critics, including many economists, blame Greenspan for not doing enough to prevent the 2008 recession and have accused him of keeping interest rates too low for too long and failing to curb risky mortgage lending. During a 2008 congressional hearing, Greenspan conceded that he'd "made a mistake" in assuming the financial markets could regulate themselves.
WHAT CAUSED THE 2008 FINANCIAL CRISIS?
The worst financial crisis since the Great Depression was triggered by overheating in the housing markets. Banks and other lenders approved mortgages, sometimes to borrowers with poor credit histories, driving up home prices to astronomical levels. Banks then sold the risky mortgage-backed securities to other financial institutions.
WHAT TRIGGERS AN ECONOMIC RECESSION?
Greenspan, once dubbed the "Maestro" in a book by Bob Woodward, served five terms as chairman, from 1987 to 2006, and was appointed by four different presidents over the course of his tenure.
He nearly became the longest-serving Fed chairman, staying in the role for nearly 19 years. The record-holder, William Martin, held the role for just four months longer than Greenspan.
WHAT HAPPENS DURING A RECESSION?
Over the course of his time at the helm of the U.S. central bank, Greenspan steered the economy through two recessions, the Asian financial crisis of 1997 and the Sept. 11 attacks. He was known for being strongly anti-inflation, and tended to focus more on controlling prices than on promoting full employment. He earned credibility from both parties along the way and was viewed as an economic sage on Capitol Hill. Headlines often referred to him as having obtained "rock star status."
Greenspan married NBC News journalist Andrea Mitchell in 1997. After he left the Fed, Greenspan started his own Washington-based consulting firm, Greenspan Associates.
He was born in New York City in 1926 and received his bachelor's, master's and Ph.D. in economics from New York University.
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