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Alan Greenspan
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  Topics Alan Greenspan Quotations
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Alan Greenspan, KBE, Ph.D., MA (born March 6, 1926) is an American economist and was Chairman of the Board of Governors of the Federal Reserve of the United States from June 2, 1987 until his retirement on January 31, 2006.

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  • But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?

  • Once stock prices reach the point at which it is hard to value them by logical methodology, stocks will be bought as they were in the late 1920s not for investment but to be unloaded at a still higher price. The ensuing break could be disastrous because panic psychology cannot be summarily altered or reversed by easing money policies.

  • The world of antitrust is reminiscent of Alice’s Wonderland: everything seemingly is, yet apparently isn’t, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet "too much" competition is condemned as "cutthroat." It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as "enlightened" when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict—after the fact.
    • "Antitrust", essay at the National Association of Business Economists (25 September 1961); published in Rand, Capitalism: The Unknown Ideal

  • An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense - perhaps more clearly and subtly than many consistent defenders of laissez-faire - that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.


  • That said, there can be little doubt that exceptionally low interest rates on ten-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding and home turnover, and especially in the steep climb in home prices. Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels.

  • The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit, which, according to the Congressional Budget Office, will rise significantly as the baby boomers start to retire in 2008. Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances.

  • Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtue, not vices. It is this superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear.
    • The Assault on Integrity, 1963

  • I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I said.
    • 1988 speech, as quoted in The New York Times, October 28, 2005

  • Since becoming a central banker, I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said.
    • Speaking to a Senate Committee in 1987, as quoted in the Guardian Weekly, November 4, 2005

  • The reason there is very little support for the gold standard is the consequences of those types of market adjustments are not considered to be appropriate in the 20th and 21st century. I am one of the rare people who have still some nostalgic view about the old gold standard, as you know, but I must tell you, I am in a very small minority among my colleagues on that issue.
    • Speaking to a Hearing before the U.S. House of Representatives' Committee on Financial Services in 7/22/1998

  • "Rising interest rates have been advertised for so long and in so many places that anyone who has not appropriately hedged this position by now obviously is desirous of losing money." - Novermber 2004 in a speech in Frankfurt



Quotes on the Housing Bubble

  • American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.
    • February 2004, in a speech praising the benefits of adjustable-rate mortgages.

  • While local economies may experience significant price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity.
    • October 2004, playing down the threat of a national housing bubble.

  • Without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern.
    • May 2005, Greenspan said in a speech that he did not believe there was a national housing bubble similar to the bubble in the stock market. But he said there was "froth" in housing and he called the pace of housing price increases unsustainable.

  • A decline in the national housing price level would need to be substantial to trigger a significant rise in foreclosures, because the vast majority of homeowners have built up substantial equity in their homes despite large mortgage-market financed withdrawals of home equity in recent years.
    • July 2005, in testimony to the House Financial Services Committee.

  • [There are] signs of froth in some local markets where home prices seem to have risen to unsustainable levels.
    • July 2005, in testimony to the House Financial Services Committee.

  • I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk.
    • September 2007, Greenspan's memoir The Age of Turbulence: Adventures in the New World.



  • Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this.
    • December 2007, in an interview Sunday on ABC's This Week. Greenspan suggested the government should boost support to homeowners facing the prospect of losing their homes because their mortgages are resetting to higher interest rates.

About Greenspan

  • If you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God.


  • I would not only reappoint Mr. Greenspan -- if Mr. Greenspan should happen to die, God forbid -- I would do like was did in the movie, 'Weekend at Bernie's.' I'd prop him up and put a pair of dark glasses on him and keep him as long as we could.


  • If you look at the speeches he gave just before he left the Fed, it's pretty much “After me - the Deluge. I'm getting out while my reputation's intact”.
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