Tags: Money | Federal Reserve | Greenspan | moves

7 Top Fed Moves Under Alan Greenspan

By    |   Friday, 10 July 2015 04:45 PM

Alan Greenspan was appointed as Federal Reserve chairman by President Reagan in 1987. Greenspan was able to deal with a financial crisis shortly after he started his new position, and he is credited with keeping the U.S. economy afloat through the upheavals that followed.

Here are seven moves by the Fed under Greenspan.

1. “Black Monday”
Greenspan became Federal Reserve chairman two months before the “Black Monday” stock market crash on October 19, 1987. Many economists blamed the crash on the high interest rates of his predecessor, Paul Volcker. Greenspan’s Fed immediately flooded the banking system with reserves, buying large amounts of government securities, according to the Roosevelt Institute. Greenspan announced the Fed would serve as a “source of liquidity” to assist the financial system.

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2. Golden Economic Period
Under Greenspan’s stewardship at the Fed, the U.S. economy continued on a boom started in the 1980s and through the 1990s, considered by many observers to be a golden economic period, thanks to Greenspan’s moves to cut interest rates, according to Investopedia.

3. Asian Financial Crisis
Greenspan lowered interest rates to soften the blow from the Asian financial crisis in 1997, which led to an Asian economic downturn. The U.S. economy remained healthy.

4. Rate Hikes
The Federal Reserve chairman then began a series of interest rate increases in 1999 as the Asian economy began to recover.

5. Deregulation
Greenspan was criticized for advocating deregulation of the financial industry and the Fed’s failure to regulate trade in securities for subprime mortgage loans in the early 2000s. The Financial Crisis Inquire Commission in 2011 blamed him for the housing bubble that helped lead to the economic meltdown of 2008, Encyclopedia Britannica said.

6. Inflation Fears
The Fed’s controlled measures to avoid inflation fears in the late 1990s are blamed for an economic downtown, according to Andrew Beattie in Investopedia. Greenspan reversed course during the technology bust in 2000.

7. Tax Cuts
Greenspan endorsed tax cuts as George W. Bush entered the presidency and also said there was a danger in paying down the national debt too fast, Beattie wrote. Critics would later charge this had a negative effect on the recession in the early 2000s and the wars that would follow after the 9/11 terrorist attacks.

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Alan Greenspan was appointed as Federal Reserve chairman by President Reagan in 1987. Greenspan was able to deal with a financial crisis shortly after he started his new position, and he is credited with keeping the U.S. economy afloat through the upheavals that followed.
Federal Reserve, Greenspan, moves
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2015-45-10
Friday, 10 July 2015 04:45 PM
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