Filed under: Management, Economic data, Federal Reserve
This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.
You could make the argument that the Chairman of the Federal Reserve is the second most important man in the world. It is true, that when the Fed Chief talks, the WHOLE world listens — and reacts — so everyone was a bit apprehensive when long-running Fed Chairman Alan Greenspan finally stepped down last year to be replaced by Ben Bernanke.
While it is still way to early to try to compare the old with the new, there have been some signs that the “new kid on the block” is going to be taking a different route in his role as Fed Chief. Greenspan, aka the “Maestro,” was viewed as a genius while in office, but as time has passed, week by week the Greenspan legacy seems to be eroding little by little. The general impression of the “Great Inflator” Greenspan has definitely shifted to where most people recognize that he was an instigator for inflation who was afraid to let the markets correct themselves to avoid forming bubbles.
It is also true that Greenspan managed to remain in control of the Federal Reserve for 18 long years (a record for the position), but the question really is how? How did Greenspan manage to remain in the seat of one of the most powerful positions in the country for such a long period? The answer to that question is that he pleases every president that he serves. How did Greenspan manage to do this? By dropping interest rates whenever any hint of trouble hit the market. Think back to 1998 when Greenspan cut rates three times after the collapse of Long Term Capital Management LP.
Continue reading Money Face-Off: Alan Greenspan vs. Ben Bernanke
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