Alan Greenspan’s Role in the Economic Crisis of Our times

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Recommended: Economics theory: Influences on Greenspan's decision making

Former Chairman of the Federal Reserve Alan Greenspan has played a key role in the economic crisis of the late 2000s (some would point out that we are still experiencing its aftershocks to this day). It’s not so much what Greenspan did as much as what he didn’t do. Greenspan’s hesitation when it comes to regulating the banking sector was motivated in part by the free-market philosophy he has propagated over his career as a leading world economist. It must be pointed out, however, that there are those who believe that Greenspan’s arms were seemingly tied behind his back by the overwhelming influence of the elite on Wall Street and the aforementioned banking sector. Robert Gnaizda of the Greenlining Institute — a non-profit public advocacy group that fights for equality for people of color as well as the underprivileged — met with Greenspan in 2004 to discuss this matter but was met by a blatant lack of interest on Greenspan’s part. Was this lack of interest due to sticking firm to his longstanding free-market beliefs, or was it the acceptance that he had no actual power to stand up to larger powers at work?
These days Greenspan has taken a sharp turn and decided to alter his views on the free-market. He admits that he along with many fellow economists misjudged the potential for crisis. Clearly this so-called error in judgement was profoundly influential in allowing the elite to accumulate massive amounts of wealth over his years not only as the Chairman of the Federal Reserve, but also in his other highly influential positions. However, the economic success under his watch turned out to be no more than bubbles (he also presided over the housing and dot-com fiascos), and like any bubble, it is bound to eventually burst. That is ...

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... freedom, the kind of power and freedom that allows one to live like a tyrant, the lure of more money and power will inevitably turn tragic. It should be the responsibly of our government to prevent this from ever being the case. Finally, I would like to add that I do believe in a free-market society. I believe everyone should have to freedom to make as much money as they please. So long as they do not hurt anyone in the process, why shouldn’t a person or corporation be allowed to amass great wealth? The key, I believe, is regulation and creation. That is, regulate the most powerful so that their power does not corrupt them, and create more opportunities for ordinary citizens who have the work ethic and creativity to succeed. Nothing should be handed out for free, and hard work should indeed be rewarded, but how can one succeed if they lose before they even start?

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