Greenspan passed away today. I checked the life of this person Greenspan is basically the first generation "bailout master" of the Federal Reserve I worked at the Federal Reserve for 18 and a half years From 1987 to 2006 Having experienced four US presidents Just took office for two months The US stock market is experiencing Black Monday The Dow Jones Industrial Average plummeted 22.6% in one day Normal people just come across this kind of situation at work I estimate that I have already started writing my resignation application But Greenspan only said one sentence: The Federal Reserve is preparing to provide liquidity to support the economy and financial system Translate it as: Don't panic, the central bank dad is here And then the market really stabilized Since then, Wall Street has discovered something: Don't be afraid of market accidents The Federal Reserve will save The 1990s were his peak Low inflation Low unemployment High growth The US economy has entered the so-called 'blonde economy' lukewarm just right In 1994, he also engaged in a vicious wave Inflation hasn't risen yet Directly raising interest rates 7 times a year At that time, the whole market scolded him Later, it was discovered that he had really suppressed inflation The most impressive is the Internet revolution in the 1990s Traditional economic theory states that a low unemployment rate will lead to inflation But Greenspan looks at micro data Look at computers, the Internet, productivity Final judgment: This time is different. Then he resisted the pressure and did not raise interest rates Allowing the United States to experience its longest round of economic expansion But the problem also starts from here The Internet foam burst in 2000 In 2001, 911 came again Greenspan directly cut interest rates 11 times in a row Cut the interest rate from 6.5% to 1% The market has fully understood: Falling down, someone will save it It collapsed, someone picked it up Losing out, someone has a backstop This is the later 'Greenspan put option' To put it simply: Wall Street can bet with peace of mind Anyway, the Federal Reserve will wipe its butt In his later years, he began to raise interest rates 17 consecutive times, 25 basis points each time It looks very elegant and precise But the mortgage interest rate just can't come down Long term interest rates are also disobedient He's already confused himself Say this is a 'puzzle' Even more outrageous is He has always believed that Wall Street will self regulate Derivatives are not a concern CDS doesn't matter Don't worry about subprime loans Because financial elites will maintain rationality for their own interests After a few years, everyone saw the result Financial elites are indeed very rational Rational enough to explode the whole world together So Greenspan is a very complicated person He was like a master in the first half of his life The second half of life looks like a foam engineer He saved the market It has also spoiled the market He created the prosperity of the 1990s Also planted the seeds of the 2008 financial crisis