Knowra Alan Greenspan Alan Greenspan Alan Greenspan is an American economist who chaired the Federal Reserve from 1987 to 2006 and later worked as a private economic adviser. His long tenure spanned major financial crises and debates over monetary policy.
Federal Reserve : The United States central bank, responsible for monetary policy, financial stability, and parts of the banking system. Greenspan led this institution for nearly two decades, shaping its public role and policy decisions.
Black Monday (1987) : The global stock-market crash of October 19, 1987, when major indexes fell sharply in a single trading day. Greenspan had been Fed chair for only weeks and responded by pledging liquidity to support financial markets.
Federal funds rate : The overnight interest rate at which banks lend reserve balances to one another, influenced by Federal Reserve policy. Adjusting this rate was Greenspan’s main instrument for steering inflation and economic activity.
Irrational exuberance : A phrase describing investor enthusiasm that pushes asset prices above levels justified by economic fundamentals. Greenspan used the phrase in a 1996 speech, making it a defining moment in his public treatment of market bubbles.
Austrian business cycle theory : An economic theory that attributes boom-and-bust cycles to credit expansion and interest rates held below market-clearing levels. Its account of artificially cheap credit contrasts with Greenspan’s confidence in flexible markets and restrained intervention.
Paul Volcker : An American economist who chaired the Federal Reserve from 1979 to 1987 and fought high inflation with restrictive monetary policy. Volcker preceded Greenspan and left him a central bank confronting the aftermath of disinflation.
Dot-com bubble : A late-1990s surge in technology-stock valuations followed by a steep market decline beginning in 2000. Greenspan warned about irrational exuberance as technology shares soared, but the Fed did not directly target stock prices.
Monetary policy : Central-bank actions that influence money, credit, interest rates, and economic conditions. Greenspan’s decisions as chair were exercises of monetary policy under changing economic conditions.
LTCM crisis : The 1998 near-collapse of Long-Term Capital Management, a highly leveraged hedge fund whose failure threatened market disruption. Greenspan’s Fed helped coordinate private-sector action to limit the crisis’s effects on financial markets.
Financial deregulation : The reduction or removal of government rules governing financial institutions and markets. Debate over deregulation during Greenspan’s tenure centers on whether supervisory restraint enabled systemic risk.
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