Alan Greenspan, Hero or Villain
To properly discuss Alan Greenspan, we need background information, where he worked and what exactly did/does he do.
Alan Greenspan (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
1987 to 2006.
Mr. Greenspan was appointed Federal Reserve (FED) chairman by President Ronald
Reagan in 1987 and was reappointed at successive four-year intervals until retiring in
January 2006.
Many people agree that Mr. Greenspan was an excellent economist, that I agree,
however, I feel that he started believing his own “press” and consequently his actions put
Americans in the deficit we are currently in. I will explain even further that Mr.
Greenspan’s own agenda is what drove him, not the best interest of the United States of America.
My goal in this paper is to expose Mr. Greenspan not as a hero of the people, but a
eccentric businessman, whom in the end, was only looking out for himself and big business.
Let’s first start by defining what the “FED” is. The Federal Reserve was created by U.S. Congress in 1913. The FED is headed by a government agency in Washington known as the Board of Governors of the Federal Reserve. The Board of Governors consists of seven Presidential appointees, each of whom serves 14-year terms. All members must be confirmed by the Senate and can be reappointed. The board is led by a chairman and a vice chairman, each appointed by the President and approved by the Senate for four-year terms.
There are 12 regional Federal Reserve Banks located in major cities around the country that operate under the supervision of the Board of Governors. Reserve banks act as the operating arm of the central bank and do most of the work of the FED. The banks generate their own income from four main sources:
1. Services provided to banks
2. Interest earned on government securities acquired while carrying out the work of the Federal Reserve
3. Income from foreign currency held
4. Interest on loans to depository institutions
The income gathered from these activities is used to finance day-to-day operations, including information gathering and economic research.
The FED also includes the Federal Open Market Committee, FMOC. This is the policy making branch of the Federal Reserve. Traditionally, the chair of the board is also selected as the chair of the FMOC.
According to federalreservehistory.org “The Federal Reserve is about the Central Bank of the United States it was created by Congress to provide the nation with a safer, more flexible and more stable monetary and financial system. The Federal Reserve was created in 1913 with the enactment of the Federal Reserve Act” (federalreservehistory.org). According to investopedia.com “the Fed is headed by a government agency in Washington known as the Board of Governors of the Federal Reserve. There are 12 regional Federal Reserve banks located in
This deficit has to do with having responsible leader who are willing to increase awareness and make beneficial changes in the nation. In my opinion, the federal debt is a serious threat to the US that must be politically address whenever possible. I believe that the candidates of the 2016 presidential election should make this issue one of the top priorities to discuss and to dictate a considerable amount of work to fix it. That is because the worse the federal debt is, the worse the future would be to the nation. Also, voters must be well educated about this issue in order to shape their decision in voting for the candidate that seems most powerful and confident about this problem. Solving this problem may be difficult and would take time and so much effort. Therefore, the changes and solution must be on both a national and individual levels as
Amity Shlaes tells the story of the Great Depression and the New Deal through the eyes of some of the more influential figures of the period—Roosevelt’s men like Rexford Tugwell, David Lilienthal, Felix Frankfurter, Harold Ickes, and Henry Morgenthau; businessmen and bankers like Wendell Willkie, Samuel Insull, Andrew Mellon, and the Schechter family. What arises from these stories is a New Deal that was hostile to business, very experimental in its policies, and failed in reviving the economy making the depression last longer than it should. The reason for some of the New Deal policies was due to the President’s need to punish businessmen for their alleged role in bringing the stock market crash of October 1929 and therefore, the Great Depression.
The Federal Reserve uses two other types of tools besides the open market operations (OMO), and they are the discount rates and reserve requirements. The FOMC is responsible for the OMO and the discount rate and reserve requirements are taken care by the Federal Reserve System’s Board of Governors. The three fundamental tools can influenced the demand and supply of and the balances that depository institution hold which can result in the change in federal funds rate.
Another federal legislation that was passed into law during the period was the Federal Reserve Act. The Federal Reserve Act of 1913, focused its energies on creating a new banking system with twelve regional Federal Reserve Banks, and each of whom were owned by member banks in its district. Also, all of the national banks automatically were members while state banks could join if they wished.
falling behind. A minimum wage increase would help to stimulate the economy, and stop the
Every day in New York City, hundreds of people walk past a huge digital billboard with giant numbers across its face. Each person who walks past this billboard sees a slightly different arrangement of numbers, growing larger every second. This board is the National Debt Clock, representing the over 14 trillion dollars currently owed by the United States. While some people claim that the national debt is caused by the falling economy, most maintain that the debt itself causes the poor economy (Budget Deficits 2007). Rising debt leads to higher interest and investment rates, and cuts into our national savings. Ignoring the national debt leaves the major burden of paying it off to later generations, while meanwhile allowing our country’s economy to further drop and our dependency on other nations to rise.
Metzler, Allan H. A History of the Federal Reserve, Vol I and II. University Press Books, 2002
The U.S budget deficit over the years has been a problem but lately the deficit has shrunk. However, what made the U.S budget deficit get to where it is today and what will it be like in the years to come. Throughout the past the U.S has operated under a deficit. This means that the U.S Spent more money than it was taking in. The cause of the excess in spending was different depending on which year. Some of the causes were war, increase in spending , and economic downturns. There were different acts passed to try and control the deficit problem. The deficit at the present time is declining. This decline is due to the improving economy, sequester, and a tax increase on high-income households. The big factor that went into the decline in the deficit for 2013 was the payment that Fannie Mae and Freddie Mac made. The deficit decline in the present time may make some think the U.S could get out of debt but it has been projected that the U.S deficit will start to increase once again.
The Federal Reserve System is a board made up with seven members. These people make the big economic decision with American interest’s rates and is reasonable to print money for the government. For Americans it is imperative when the country falls into a recession. The American people need to be open to policy change and the government needs to help the people by following their own fiscal projections so the economy can move forward to help stabilize the economy and overall economic
In 1913, Wilson and Congress passed the Federal Reserve Act to make a decentralized national bank containing twelve local offices. By and large, all the private banks in every district possessed and worked that separate area's branch. In any case, the new Federal Reserve Board had the last say in choices influencing all branches, including setting financing costs and issuing money. This new managing an account framework settled national funds and credit and helped the monetary framework survive two world wars and the Great
Author Unknown (1994). The Federal Reserve System: Purposes and Functions (5th ed.) Published by Library of Congress
As we are moving to the end of the course, we want to present you with the Federal Reserve System (Fed), which is the central bank of the USA. We are going to explore the roles of Fed in regularizing the economy, its function, and also the tools used in doing that. We will learn how central banks regulate the banking system and how they manage money supply in economies. We will also be presented to the financial crises lessons we can be able to understand the importance of the regulatory system; and then, we answering questions such as:
Batra, Ravi. Greenspan's Fraud: How Two Decades of His Policies Have Undermined the Global Economy. New York, NY: Palgrave Macmillan, 2005.
Veldhuis, Neil. “Beyond our means: Government debt tops $1.2-trillion and spending is still rising.” Financial Post. National Post, 16 May 2013. Web. 23 Feb. 2014.