Alan Greenspan served as chair of the Federal Reserve for almost two decades. His explanations for Fed actions and congressional testimony were notoriously obscure, eventually becoming known as “Greenspeak” or “Fedspeak.”
But Greenspan also introduced Fed statements, which did give a clear reason for interest rate decisions. The Fed still issues them after every interest rate meeting.
There’s a debate over whether Greenspan’s Fed kept interest rates too low for too long, fueling a housing bubble that eventually burst.
“He was asleep at the switch a bit on the housing bubble. He did have great faith in market discipline, that we couldn’t have a bubble because markets are more disciplined than that,” said Julia Coronado, founder and president of MacroPolicy Perspectives and a former Fed economist who served under Greenspan.
But Coronado said the housing bubble was caused more by regulations that were too loose and pointed out that the Fed under Greenspan did eventually raise rates.
“During his 18 years as Chairman, [Greenspan] guided the Federal Reserve through periods of significant economic expansion as well as periods of considerable stress,” read a Federal Reserve press release. “He brought rigorous analytical discipline to monetary policymaking and helped establish the credibility that remains one of the Federal Reserve's most important assets.”
To listen to “Marketplace Morning Report” host Kimberly Adam chat more with Julia Coronado about Alan Greenspan’s role in boosting Fed transparency, his particular way of communicating, and more, click the media player below.
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