Alan Greenspan book explored on Alphachat

FT Alphachat is a really good podcast – you can get it on iTunes. They recently interviewed Sebastian Mallaby, the author who wrote “The Man Who Knew”, one of the most thoroughly researched books on former Federal Reserve chairman Alan Greenspan.

Some brief thoughts:

  • Greenspan’s intellectual and personal journey over the course of his life is fascinating, his involvement with Ayn Rand and the Nixon campaign as a polling analyst and effectively a key campaign operative close to the likes of Pat Buchanan particularly so. I wonder how his internal dialogue changed over the years given he was essentially active at the highest level of economic thinking from the 1950’s through to the mid 2000’s.
  • Alan Greenspan’s thesis basically argued that central bank inability to respond promptly to asset price bubbles was an argument for a return to a gold standard – i.e arguing against the idea of central bank controlling inflation through monetary policy. He also understood the clear links between investment and consumption through firm and household responses to changes in asset prices i.e. the wealth effect. I wonder how he looks back on all of the booms and busts he observed and whether he’d change how he reacted in the moment. Was keeping interest rates low really the biggest deal? Was the GFC really inevitable? What about the global savings glut theories?