Alan Greenspan, who commanded the Federal Reserve for 18 years and shaped economic policy across two decades, has died at 100. His legacy remains fiercely contested, branded by critics as the architect of the 2008 financial collapse that devastated millions of American households.
Greenspan led the Fed from August 1987 to January 2006, wielding extraordinary influence over interest rates and the broader economy. His power extended far beyond central banking. By raising rates sharply in the early 1990s, he effectively tanked the economy just as George HW Bush sought reelection, handing the presidency to Bill Clinton. That same leverage then bent Clinton's agenda toward deficit reduction, away from the ambitious social programs the new administration had promised.
The Fed chair held almost singular sway over presidential ambitions. Clinton's economic team, understanding Greenspan's chokehold on Wall Street confidence, had no choice but to accommodate his obsession with slashing deficits and containing inflation, even as unemployment and wage stagnation followed in that strategy's wake.
Yet Greenspan's most destructive act came through his ideological crusade against regulation. He championed the repeal of Glass-Steagall, the Depression-era firewall that had kept commercial and investment banking separate and prevented institutions from wagering depositors' savings on speculative bets. He also fought tooth and nail against regulating derivatives, the complex financial instruments that ultimately became weapons of mass economic destruction.
When the 2008 crisis erupted, wiping out jobs, savings, and homes for millions, Greenspan finally conceded ground. He confessed to Congress that he had discovered a flaw in his worldview: his belief that banks and financial firms, driven by self-interest, would police themselves. "I was shocked," he said, betraying an astonishing naivete about the machinery he had spent decades defending.
What Greenspan failed to grasp was elementary. Decades of deregulation had not created a system of rational actors protecting shareholder value. It had created a casino. Greed, fraud, and reckless betting had always been the point. Greenspan's shock revealed how detached he had become from the reality of markets he claimed to understand.
Those who tried to warn him found his charm impenetrable. His intelligence was formidable, his manner courteous. He could dine with cabinet officials and leave them feeling flattered, even as he steered them toward the policies he wanted. His ambition, matched only by his ideological rigidity, made him the most powerful unelected official in American government, answerable to no one and bound by no accountability to the public.
The financial ruin of 2008 traced directly to Greenspan's choices and ideology. Millions paid the price for his blind faith in self-regulating markets. His death closes a chapter on an era of deregulation that remade American capitalism, but the damage persists.
Author James Rodriguez: "Greenspan was brilliant and charming, but his free-market dogma blinded him to the greed and fraud he was enabling."
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