Alan Greenspan

Alan Greenspan was the former head of the US Federal Reserve and served as the chairman for almost two decades from 1987 to 2006.

Alan Greenspan is an American economist who served as the 13th chair of the Federal Reserve. His tenure lasted from 1987 to 2006. Greenspan is one of the fiercest critics of cryptocurrencies.

Many economists have argued that Greenspan’s policies, often referred to as the “easy-money” policies, led to the dot-com bubble crisis and the housing market crash of 2008. However, Greenspan opposes these arguments. According to him, the 2008 housing crash was not due to short-term low-interest rates, it was a result of a global phenomenon that led to the progressive decline in long-term interest rates. He believes it was caused by the relationship between high savings rates in developing nations, and its inverse in developed nations.

In 2017, Greenspan compared bitcoin to a currency issued during the American revolutionary war in 1775, called the continental currency. It was not backed by any commodity and collapsed by 1782. 

He believes bitcoin is going to take the same route. He noted that a huge share of the continental currency was used to create real goods and services despite having no real value. 

During his time at the Federal Reserve, Greenspan was renowned for being hawkish on inflation. In an essay titled Gold and Economic Freedom, he called for a return to the gold standard.

However, he eventually changed his views on inflation, conceding that the economy might not be as susceptible to inflation as he had predicted. In his career, Greenspan was often flexible when it came to inflation and was willing to risk it under conditions that could cause severe depression. In the early 2000s, he oversaw the cutting of interest rates to levels not seen in decades.

The 2008 financial markets crash was the trigger for the creation of Bitcoin, which launched soon after in 2009. Its goal was to give economic power back to the masses. In that regard, blockchain has been quite a success.