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“Age of Turbulence” by Alan Greenspan


Alan Greenspan’s Age of Turbulence is a personal memoir combined with the description of his role as Federal Reserve Chairman for the last 18 years. In this book, he traces his evolution from the life of an academic to the post of the Federal Reserve chairman. In this book, Greenspan lays out his philosophy of the free market system and how he managed the economy during what he describes a “turbulent” phase. His memoir is entertaining and provocative at times and at other times, it is engaging and a bit dull as well.

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Thus, The Age of Turbulence lives up to the title by describing the momentous changes that have occurred in the US and its economy over the last two decades. As some critics have pointed out, it is like combining two books at once. The first part is a personal memoir and the second part is the history of the economic policy under his watch at the Federal Reserve.

Alan Greenspan has led a life moving in the high places and has met and interacted with the people who shape policy in the United States. He has been a member of the establishment right from the days of Richard Nixon and has advised all the presidents ever since as part of their economic advisory team. In the book, he describes how he functioned with the presidents and his accounts are lively and entertaining as well. This paper looks at the book and the ideas of Alan Greenspan and his role over presiding the longest ever boom in American history. Though he has been credited with an expansionist monetary policy and is known for ensuring that liquidity in the system does not dry up, the current economic crisis is in part being blamed on the Greenspan years.

Thus, he has attracted praise and criticism alike for his handling of the economy. We look at both sides and see how they stack up against each other. The fact that the American economy grew at a record pace during his tenure is testament to his deft handling of the economy. But, as many argue, the current economic troubles of the US can also be blamed on Greenspan and his credo of cutting interest rates at will ensured bountiful liquidity and this was liked by the markets. But, at what cost is the question? The policies of Alan Greenspan also led to the businesses and banks lending to the homeowners and the sub-prime borrowers in such a way that unethical practice became the order of the day. Thus, the expansionist monetary policy of Alan Greenspan became the nemesis of the American economy.

Personal Life

Alan Greenspan can be described as a child prodigy. He was precociously talented as his skill at numbers and music in his early years shows. Though he did not go to any fashionable school or attend any of the prep schools, nonetheless he made to the top by virtue of his hard work and his ability to adapt himself to tough situations and circumstances. As his memoir shows, he tried auditioning to play clarinet for Henry Jerome’s trumpet band. Though he got the job, he never really became a star.

But, what stands out is his ability to make the best use of the opportunity. He ensured that between shows he read business books and updated himself with the happenings in the business world. Thus, he kept in constant touch with the happenings in the outside world even when he was not into the academic world. His story is replete with such examples where he was always trying to outgrow the lack of opportunities in his early life and was always on the lookout for that something that would make him big.

When he was studying economics at the New York University, he made it a point to confront the statistical issues of economics instead of grand questions like the new economic order and the like. As he writes, ““I still had the sideman psychology.” “I preferred to focus on technical challenges and did not have a macro view.” It was this ability of being good with numbers that saw him being such a wizard at detail and which he put to use when he was the Fed chairman.

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Greenspan became a stockbroker and was running his own consultancy on Wall Street for several years. Though there is not much mention of what he did in the consultancy in the book, it is by no means an insignificant phase as he managed to ensure that the firm that he co-founded in 1954, Townsend-Greenspan was very much in the reckoning in matters concerning the business.

He has married twice and the second marriage was to Andrea Mitchell who works at a major television network. When 9/11 happened, the first thing he did was to get through to find out about her safety. The first marriage is also not mentioned in depth apart for that phase of his life when he was heavily influenced by Ayn Rand.

This comes out clearly in subsequent thinking as his economic policies were uber capitalist in nature and his ideas on free markets matched that of Rand’s philosophy of unfettered capitalism. In the next section, we look at his tenure as an economic advisor to the presidents from Nixon to Bush in various capacities culminating in his role as the Federal Reserve chairman.

Serving the Presidents

The fact that Alan Greenspan served all the presidents from Nixon onwards to George Bush Jr. shows that he was highly rated for his intellectual abilities and his deft handling of economic issues. Though he had disagreements with some of them, notably Reagan, he nevertheless struck a balance between his job and his duty of serving the country.

During his tenure as the Fed chief, Alan Greenspan saw many “turbulent” moments like the 1987 stock market crash and the collapse of LTCM and disappearance of hedge funds. As he writes, “he has seen the best and worst of the economy with the traumatic 9/11 attacks and the end of the cold war era and the possibilities that it presented”. Thus, it can be said that Greenspan led a full life in the economic helm and he can be credited with serving the country well.

The faith reposed in him by successive presidents was adequately rewarded in his efforts wherein he managed to rein in inflation and presided over the longest boom in American economic history. Of course, as we shall see in subsequent sections, he has been criticized for his expansionist policies as well.

The Policies of Alan Greenspan

The main criticism against Greenspan is that he created a bubble of unimaginable proportions the effects of which are being felt only now. Thus, the expansionist policy of lowering the Federal funds rate provided the markets with unlimited liquidity and this made the operators throw caution to the winds and indulge in practices that can only be described as unethical and without restraint.

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Greenspan has also been criticized for not regulating the mortgage market that may be without much substance since he could not directly regulate the lending practices and the task of identifying the risk worthiness of individuals. But, what he could have done was go in for more prudent fiscal policies that would have mitigated the effect of the bubble the deflationary effect of which is being felt now.

It is to his credit that he had a vision of increasing borrowing so that the small home owners can be compensated in the form of lowered rates for home mortgages. This is no doubt moral and noble. However, the practice of indiscriminate borrowing and lending is something that he could not control and it is somewhat ambiguous on whether he can be held accountable for the current crisis.

However, it remains a fact that the Fed Chairman is supposed to the be the czar of the fiscal and monetary policies and he in conjunction with the Treasury secretary is responsible for steering the country out of the economic troubles. Thus, history would let us know if Greenspan has been successful or failed in hindsight. At the moment, the jury is out on how successful he was or how much of a failure he was.


The book is engaging to read, though it is voluminous by comparison to other memoirs. The part memoir part history book is nonetheless an important contribution to the existing literature about the last two decades of expansionist monetary polices and the boom years followed by the set backs caused by 9/11. It is worth reading for anyone interested in knowing about the economic history of the US after the cold war.

But, the book disappoints in that it is not that much of a biography as Greenspan does not offer too much insights into his own life and shies away from revealing the gaze to such an extent that it is simply not possible to know more about his personal life. He also does not reveal his ambitions and at most times; it is a dry rendition of events with an academic gaze instead of a witty memoir.

Praise him or criticize him, Alan Greenspan had a pivotal role to play in the history of the American republic and his contributions would be felt for years to come. It is to his credit that he has inspired many to take up the study of economics with a passion for numbers that is his trademark style.

In conclusion, it can be said that Alan Greenspan would rank as one of the most influential members of the American establishment since the 1970’s and his words have to taken seriously. For students like me, it is a must read to know more about this fascinating character and financial wizard who did so much for the country. I enjoyed reading the book very much and it has contributed to my understanding of economics.

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