Former Federal Reserve chairman Alan Greenspan | 60 Minutes Archive

60 Minutes Rewind 60 Minutes Rewind Alan Greenspan may go down as one of the Alan Greenspan may go down as one of the Alan Greenspan may go down as one of the best chairman of the Federal Reserve in best chairman of the Federal Reserve in best chairman of the Federal Reserve in American history. His 18-year tenure was American history. His 18-year tenure was American history. His 18-year tenure was marked by unprecedented economic growth, marked by unprecedented economic growth, marked by unprecedented economic growth, budget surpluses, and a booming stock budget surpluses, and a booming stock budget surpluses, and a booming stock market. And he was praised universally market. And he was praised universally market. And he was praised universally for shepherding the economy through the for shepherding the economy through the for shepherding the economy through the shock of 9/11. shock of 9/11. shock of 9/11. Now, he's written his memoir, The Age of Now, he's written his memoir, The Age of Now, he's written his memoir, The Age of Turbulence, which comes out just as he's Turbulence, which comes out just as he's Turbulence, which comes out just as he's coming under fire, something he's not coming under fire, something he's not coming under fire, something he's not used to, for today's housing and lending used to, for today's housing and lending used to, for today's housing and lending crises. crises. crises. His critics say he established a pattern His critics say he established a pattern His critics say he established a pattern of bailing out Wall Street investors. of bailing out Wall Street investors. of bailing out Wall Street investors. Greenspan sat down with us for his first Greenspan sat down with us for his first Greenspan sat down with us for his first major interview, defending himself major interview, defending himself major interview, defending himself against the criticism that he should against the criticism that he should against the criticism that he should have done something to stop the shady have done something to stop the shady have done something to stop the shady practices in subprime lending. practices in subprime lending. practices in subprime lending. In a rare admission, he told us he In a rare admission, he told us he In a rare admission, he told us he missed its significance. missed its significance. missed its significance. >> If you knew these practices were going >> If you knew these practices were going >> If you knew these practices were going on, and even maybe just suspected that on, and even maybe just suspected that on, and even maybe just suspected that there was something illegal or shady, there was something illegal or shady, there was something illegal or shady, why didn't you speak out?

why didn't you speak out? why didn't you speak out? >> Well, basically >> Well, basically >> Well, basically >> had a huge megaphone. People really >> had a huge megaphone. People really >> had a huge megaphone. People really listened to Alan Greenspan. listened to Alan Greenspan. listened to Alan Greenspan. >> I was aware a lot of these practices >> I was aware a lot of these practices >> I was aware a lot of these practices were going on. I had no notion of how were going on. I had no notion of how were going on. I had no notion of how significant they had become until very significant they had become until very significant they had become until very late. I didn't really get it until uh late. I didn't really get it until uh late. I didn't really get it until uh very late in 2005 and 2006. very late in 2005 and 2006. very late in 2005 and 2006. >> But others at the Fed did get it, that >> But others at the Fed did get it, that >> But others at the Fed did get it, that banks and mortgage companies had already banks and mortgage companies had already banks and mortgage companies had already signed up millions of home buyers and signed up millions of home buyers and signed up millions of home buyers and speculators, many with poor credit, for speculators, many with poor credit, for speculators, many with poor credit, for so-called subprime mortgages with so-called subprime mortgages with so-called subprime mortgages with complicated interest rate adjustments complicated interest rate adjustments complicated interest rate adjustments that have led to record numbers of that have led to record numbers of that have led to record numbers of defaults. Some of the practices were defaults. Some of the practices were defaults. Some of the practices were fraudulent. One of your former Fed fraudulent. One of your former Fed fraudulent. One of your former Fed governors, Ed Gramlich, said that he governors, Ed Gramlich, said that he governors, Ed Gramlich, said that he proposed that the Fed examine these proposed that the Fed examine these proposed that the Fed examine these lending practices lending practices lending practices and look into them from to see if and look into them from to see if and look into them from to see if something could be done. something could be done. something could be done. And that you rejected that idea. And that you rejected that idea. And that you rejected that idea. >> Well, I thought >> Well, I thought >> Well, I thought >> Why did you reject it? >> Why did you reject it? >> Why did you reject it? >> I thought that >> I thought that >> I thought that it one would not be we would not be it one would not be we would not be it one would not be we would not be capable of doing what he was suggesting.

capable of doing what he was suggesting. capable of doing what he was suggesting. >> What of sitting on them taking some >> What of sitting on them taking some >> What of sitting on them taking some regulate what? regulate what? regulate what? >> Well, I think not. >> Well, I think not. >> Well, I think not. >> Even if you even looked into it? >> Even if you even looked into it? >> Even if you even looked into it? >> Well, I there's nothing to look into >> Well, I there's nothing to look into >> Well, I there's nothing to look into particularly because we knew particularly because we knew particularly because we knew that there was a number of such that there was a number of such that there was a number of such practices practices practices um going up but it's very difficult um going up but it's very difficult um going up but it's very difficult to to to for banking regulators to deal with for banking regulators to deal with for banking regulators to deal with that. that. that. >> He insists there's nothing he could have >> He insists there's nothing he could have >> He insists there's nothing he could have done to prevent today's plummeting home done to prevent today's plummeting home done to prevent today's plummeting home prices and the fact that a million prices and the fact that a million prices and the fact that a million families have lost their homes and many families have lost their homes and many families have lost their homes and many more could. more could. more could. But some economists now say Greenspan But some economists now say Greenspan But some economists now say Greenspan actually created the housing bubble and actually created the housing bubble and actually created the housing bubble and the credit crunch by keeping interest the credit crunch by keeping interest the credit crunch by keeping interest rates too low for too long. rates too low for too long. rates too low for too long. >> Just remember >> Just remember >> Just remember we raised interest rates at every we raised interest rates at every we raised interest rates at every meeting meeting meeting from June of 2004 from June of 2004 from June of 2004 till I got out of office. till I got out of office. till I got out of office. >> You raised rates in 2004 but only after >> You raised rates in 2004 but only after >> You raised rates in 2004 but only after you held interest rates you held interest rates you held interest rates um at at historically low levels for 3 um at at historically low levels for 3 um at at historically low levels for 3 years years years while the bubble the housing bubble was while the bubble the housing bubble was while the bubble the housing bubble was forming. And that you had 13 rate cuts forming. And that you had 13 rate cuts forming. And that you had 13 rate cuts in that period of time.

in that period of time. in that period of time. >> It was our job to unfreeze the American >> It was our job to unfreeze the American >> It was our job to unfreeze the American banking system if we wanted the economy banking system if we wanted the economy banking system if we wanted the economy to function. to function. to function. This required that we keep rates This required that we keep rates This required that we keep rates modestly low. modestly low. modestly low. >> But some of the the Fed governors who >> But some of the the Fed governors who >> But some of the the Fed governors who worked with you at the time are now worked with you at the time are now worked with you at the time are now saying that they think interest rates saying that they think interest rates saying that they think interest rates were too low for too long. were too low for too long. were too low for too long. >> Uh >> Uh >> Uh I think they are mistaken. I think they are mistaken. I think they are mistaken. >> [clears throat] >> [clears throat] >> [clears throat] >> What this shows is how certain he is >> What this shows is how certain he is >> What this shows is how certain he is about his views and how firmly he guided about his views and how firmly he guided about his views and how firmly he guided the Fed when he was chairman and dealt the Fed when he was chairman and dealt the Fed when he was chairman and dealt with shocks to the financial markets by with shocks to the financial markets by with shocks to the financial markets by quickly lowering interest rates. Now, in quickly lowering interest rates. Now, in quickly lowering interest rates. Now, in the current turmoil, investors are the current turmoil, investors are the current turmoil, investors are calling on his successor, Ben Bernanke, calling on his successor, Ben Bernanke, calling on his successor, Ben Bernanke, to do what Greenspan would have done. to do what Greenspan would have done. to do what Greenspan would have done. >> The sense is you would have acted >> The sense is you would have acted >> The sense is you would have acted sooner. You would have put thrown more sooner. You would have put thrown more sooner. You would have put thrown more cash and liquidity into the system. You cash and liquidity into the system. You cash and liquidity into the system. You would have acted faster and more would have acted faster and more would have acted faster and more dramatically. dramatically. dramatically. >> I'm not sure that's true. And let me >> I'm not sure that's true. And let me >> I'm not sure that's true. And let me tell you why. tell you why. tell you why. We were dealing in an environment back We were dealing in an environment back We were dealing in an environment back there where inflation was easing. So, we there where inflation was easing. So, we there where inflation was easing. So, we could move sooner without the fear of could move sooner without the fear of could move sooner without the fear of stroke stoking inflationary pressures.

stroke stoking inflationary pressures. stroke stoking inflationary pressures. You can't do that anymore. You can't do that anymore. You can't do that anymore. And therefore, it's a different world. And therefore, it's a different world. And therefore, it's a different world. I'm not certain that I would have done I'm not certain that I would have done I'm not certain that I would have done anything different. Were I there or anything different. Were I there or anything different. Were I there or >> So, you don't think you would have acted >> So, you don't think you would have acted >> So, you don't think you would have acted any faster? any faster? any faster? >> it. >> it. >> it. >> So, you don't see any light between you >> So, you don't see any light between you >> So, you don't see any light between you and what Mr. Bernanke is doing. and what Mr. Bernanke is doing. and what Mr. Bernanke is doing. >> I think he's doing an excellent job. >> I think he's doing an excellent job. >> I think he's doing an excellent job. >> The CEOs of Ford and Chrysler are >> The CEOs of Ford and Chrysler are >> The CEOs of Ford and Chrysler are begging the Fed to lower rates. I mean, begging the Fed to lower rates. I mean, begging the Fed to lower rates. I mean, on their hands and knees. on their hands and knees. on their hands and knees. >> I would suggest that they >> I would suggest that they >> I would suggest that they focus on selling focus on selling focus on selling creating better cars for their creating better cars for their creating better cars for their customers. customers. customers. >> The current criticism of his time at the >> The current criticism of his time at the >> The current criticism of his time at the Fed notwithstanding. Fed notwithstanding. Fed notwithstanding. >> Do you miss coming to work here? >> Do you miss coming to work here? >> Do you miss coming to work here? >> Alan Greenspan guided the economy >> Alan Greenspan guided the economy >> Alan Greenspan guided the economy through the jolt of 9/11 and presided through the jolt of 9/11 and presided through the jolt of 9/11 and presided over an unprecedented stretch of 10 over an unprecedented stretch of 10 over an unprecedented stretch of 10 years without a recession. years without a recession. years without a recession. When he retired in 2006 at age 79, he When he retired in 2006 at age 79, he When he retired in 2006 at age 79, he was considered almost infallible. was considered almost infallible. was considered almost infallible. >> Now that you are out of government and >> Now that you are out of government and >> Now that you are out of government and making real money, making real money, making real money, I'm I'm wondering how you're investing.

I'm I'm wondering how you're investing. I'm I'm wondering how you're investing. Are you investing in real estate? Are you investing in real estate? Are you investing in real estate? >> There are certain questions I never >> There are certain questions I never >> There are certain questions I never thought you would ask, but knew that if thought you would ask, but knew that if thought you would ask, but knew that if you did, I wouldn't answer, and you just you did, I wouldn't answer, and you just you did, I wouldn't answer, and you just hit one of them. hit one of them. hit one of them. >> What about the stock market? >> What about the stock market? >> What about the stock market? >> I just as soon not comment. >> I just as soon not comment. >> I just as soon not comment. >> But that's what everybody wants to know. >> But that's what everybody wants to know. >> But that's what everybody wants to know. >> I'm sure they do. >> I'm sure they do. >> I'm sure they do. >> I tried again later by asking about his >> I tried again later by asking about his >> I tried again later by asking about his book advance, reportedly $8 million. book advance, reportedly $8 million. book advance, reportedly $8 million. Well, if you could be paid in any Well, if you could be paid in any Well, if you could be paid in any currency currency currency in the whole world, in the whole world, in the whole world, what would you like to be paid in? what would you like to be paid in? what would you like to be paid in? >> Well, as an economist I would say I >> Well, as an economist I would say I >> Well, as an economist I would say I couldn't care less because I can couldn't care less because I can couldn't care less because I can immediately convert it in the exchange immediately convert it in the exchange immediately convert it in the exchange markets to whatever markets to whatever markets to whatever >> So it doesn't matter? >> So it doesn't matter? >> So it doesn't matter? >> No. >> No. >> No. >> Euros, dollars, dinars, it's all the >> Euros, dollars, dinars, it's all the >> Euros, dollars, dinars, it's all the same to you? same to you? same to you? >> question basically is in what currency >> question basically is in what currency >> question basically is in what currency do you wish to hold your assets? do you wish to hold your assets? do you wish to hold your assets? >> Okay. >> Okay. >> Okay. >> And uh what I've done is I diversify. >> And uh what I've done is I diversify. >> And uh what I've done is I diversify. >> Oh, you do? Even in terms of currency? >> Oh, you do? Even in terms of currency? >> Oh, you do? Even in terms of currency? >> Yeah. >> Yeah. >> Yeah. >> Not a surprise. He wouldn't say which >> Not a surprise. He wouldn't say which >> Not a surprise. He wouldn't say which currencies he's holding. currencies he's holding. currencies he's holding. >> That's a nice picture. >> That's a nice picture. >> That's a nice picture. >> What is a surprise is how personal and >> What is a surprise is how personal and >> What is a surprise is how personal and chatty his book is. By his own chatty his book is. By his own chatty his book is. By his own admission, The Age of Turbulence is a admission, The Age of Turbulence is a admission, The Age of Turbulence is a psychoanalysis of himself.

psychoanalysis of himself. psychoanalysis of himself. And analyze this, he wrote it in And analyze this, he wrote it in And analyze this, he wrote it in longhand in a pretty unusual place. longhand in a pretty unusual place. longhand in a pretty unusual place. >> Is it true >> Is it true >> Is it true that you wrote this in the bathtub? that you wrote this in the bathtub? that you wrote this in the bathtub? >> 80% of it, yeah. >> 80% of it, yeah. >> 80% of it, yeah. >> Greenspan pokes fun at himself, >> Greenspan pokes fun at himself, >> Greenspan pokes fun at himself, especially in the telling of his romance especially in the telling of his romance especially in the telling of his romance with NBC news woman Andrea Mitchell, with NBC news woman Andrea Mitchell, with NBC news woman Andrea Mitchell, who's 21 years younger than he is. On who's 21 years younger than he is. On who's 21 years younger than he is. On their first date in 1984, they had their first date in 1984, they had their first date in 1984, they had dinner and he invited her back to his dinner and he invited her back to his dinner and he invited her back to his apartment for a bit of romantic reading. apartment for a bit of romantic reading. apartment for a bit of romantic reading. >> Did you believe he did >> Did you believe he did >> Did you believe he did He did want to show me an essay he had He did want to show me an essay he had He did want to show me an essay he had written. written. written. >> [laughter] >> [laughter] >> [laughter] >> About what? >> About what? >> About what? >> [gasps] >> [gasps] >> [gasps] >> This is antitrust. >> This is antitrust. >> This is antitrust. >> Antitrust. >> Antitrust. >> Antitrust. >> I had a long I had a long monopolies and >> I had a long I had a long monopolies and >> I had a long I had a long monopolies and on the Sherman Antitrust Act of 1890. on the Sherman Antitrust Act of 1890. on the Sherman Antitrust Act of 1890. >> You know how to woo >> You know how to woo >> You know how to woo >> What's even worse, it worked. It worked. >> What's even worse, it worked. It worked. >> What's even worse, it worked. It worked. [laughter] [laughter] [laughter] >> They dated for 13 years before he >> They dated for 13 years before he >> They dated for 13 years before he finally [music] popped the question. finally [music] popped the question. finally [music] popped the question. >> I hinted at it several different times. >> I hinted at it several different times. >> I hinted at it several different times. >> He used Fib speak. It was Who knew he >> He used Fib speak. It was Who knew he >> He used Fib speak. It was Who knew he was proposing? [laughter] was proposing? [laughter] was proposing? [laughter] I couldn't figure it out.

I couldn't figure it out. I couldn't figure it out. >> Oh, and for their honeymoon, he took her >> Oh, and for their honeymoon, he took her >> Oh, and for their honeymoon, he took her to an international monetary conference. to an international monetary conference. to an international monetary conference. His wonkiness and love of statistics go His wonkiness and love of statistics go His wonkiness and love of statistics go back to when he was a little boy in back to when he was a little boy in back to when he was a little boy in Depression-era New York City when he Depression-era New York City when he Depression-era New York City when he collected railroad timetables, learned collected railroad timetables, learned collected railroad timetables, learned Morse code, and memorized baseball Morse code, and memorized baseball Morse code, and memorized baseball stats. stats. stats. You're what we would call today You're what we would call today You're what we would call today a geek. You're a geek. Back then. a geek. You're a geek. Back then. a geek. You're a geek. Back then. >> [laughter] >> [laughter] >> [laughter] >> You know, like some people >> You know, like some people >> You know, like some people you know, love reading murder mysteries. you know, love reading murder mysteries. you know, love reading murder mysteries. >> Yeah. >> Yeah. >> Yeah. >> I loved reading that stuff. >> I loved reading that stuff. >> I loved reading that stuff. >> [laughter] >> [laughter] >> [laughter] >> And yet he spent a good part of his >> And yet he spent a good part of his >> And yet he spent a good part of his young life trying to be anything but an young life trying to be anything but an young life trying to be anything but an economist. His first dream was to be a economist. His first dream was to be a economist. His first dream was to be a professional baseball player. professional baseball player. professional baseball player. >> So, because when I was 12 >> So, because when I was 12 >> So, because when I was 12 and younger, I could hit a curveball. and younger, I could hit a curveball. and younger, I could hit a curveball. >> We went to a game in Washington the >> We went to a game in Washington the >> We went to a game in Washington the other day and he showed me how he still other day and he showed me how he still other day and he showed me how he still fills out the scorecards. Probably the fills out the scorecards. Probably the fills out the scorecards. Probably the original Fed speak. It wasn't his original Fed speak. It wasn't his original Fed speak. It wasn't his curveball, but his handling of the curveball, but his handling of the curveball, but his handling of the economy.

economy. economy. >> I got to tell you we miss you. >> I got to tell you we miss you. >> I got to tell you we miss you. >> That had people at the game lining up to >> That had people at the game lining up to >> That had people at the game lining up to get his autograph on dollar bills. get his autograph on dollar bills. get his autograph on dollar bills. >> If it wasn't for him, I wouldn't have a >> If it wasn't for him, I wouldn't have a >> If it wasn't for him, I wouldn't have a house right now. house right now. house right now. >> Professional ball didn't work out. So, >> Professional ball didn't work out. So, >> Professional ball didn't work out. So, what then? what then? what then? >> I was going to be a professional >> I was going to be a professional >> I was going to be a professional musician. musician. musician. >> Alan Greenspan jazz band. >> Alan Greenspan jazz band. >> Alan Greenspan jazz band. That's going to surprise people. That's going to surprise people. That's going to surprise people. Greenspan was a good enough saxophonist Greenspan was a good enough saxophonist Greenspan was a good enough saxophonist in high school that instead of going in high school that instead of going in high school that instead of going right off to college, he was hired by right off to college, he was hired by right off to college, he was hired by the popular Henry Jerome Orchestra and the popular Henry Jerome Orchestra and the popular Henry Jerome Orchestra and travel the country playing bebop jazz. travel the country playing bebop jazz. travel the country playing bebop jazz. At 17, he was hardly Mr. Cool. While the At 17, he was hardly Mr. Cool. While the At 17, he was hardly Mr. Cool. While the other band members smoked pot and drank other band members smoked pot and drank other band members smoked pot and drank booze between sets, booze between sets, booze between sets, he read books about the British stock he read books about the British stock he read books about the British stock market. You're sitting over here by the market. You're sitting over here by the market. You're sitting over here by the side reading? side reading? side reading? >> I'm in another room >> I'm in another room >> I'm in another room >> You're in another room you're >> You're in another room you're >> You're in another room you're >> sitting there reading a book. >> sitting there reading a book. >> sitting there reading a book. >> You said you ended up doing their income >> You said you ended up doing their income >> You said you ended up doing their income taxes. taxes. taxes. >> True. >> True. >> True. >> [laughter] >> [laughter] >> [laughter] >> In the end, became an economist with his >> In the end, became an economist with his >> In the end, became an economist with his own forecasting firm in New York in the own forecasting firm in New York in the own forecasting firm in New York in the 1950s.

1950s. 1950s. That's when he became friends with That's when he became friends with That's when he became friends with philosopher Ayn Rand, author of Atlas philosopher Ayn Rand, author of Atlas philosopher Ayn Rand, author of Atlas Shrugged. Shrugged. Shrugged. Was this hot off the press when she gave Was this hot off the press when she gave Was this hot off the press when she gave it to you? it to you? it to you? >> Oh, yeah. It It was still warm when I >> Oh, yeah. It It was still warm when I >> Oh, yeah. It It was still warm when I read it. read it. read it. >> Yeah. >> Yeah. >> Yeah. Rand advocated a doctrine of unfettered, Rand advocated a doctrine of unfettered, Rand advocated a doctrine of unfettered, unregulated capitalism, and Greenspan unregulated capitalism, and Greenspan unregulated capitalism, and Greenspan was one of her most famous disciples. was one of her most famous disciples. was one of her most famous disciples. Though, in a twist of fate, he'd later Though, in a twist of fate, he'd later Though, in a twist of fate, he'd later become the nation's top banking become the nation's top banking become the nation's top banking regulator. regulator. regulator. >> Do you know what her nickname of you >> Do you know what her nickname of you >> Do you know what her nickname of you was? was? was? >> The undertaker. >> The undertaker. >> The undertaker. >> The undertaker. She thought you radiated >> The undertaker. She thought you radiated >> The undertaker. She thought you radiated gloom. gloom. gloom. But Rand also thought But Rand also thought But Rand also thought that you were too much of a social that you were too much of a social that you were too much of a social climber. climber. climber. >> I don't know how to respond to that. Uh >> I don't know how to respond to that. Uh >> I don't know how to respond to that. Uh everybody is a social climber, if you everybody is a social climber, if you everybody is a social climber, if you want to put it in one way or another. want to put it in one way or another. want to put it in one way or another. I mean, and the reason that we I mean, and the reason that we I mean, and the reason that we fundamentally is inbred in all of us fundamentally is inbred in all of us fundamentally is inbred in all of us is the need to get the approval of is the need to get the approval of is the need to get the approval of others. And the ultimate form of getting others. And the ultimate form of getting others. And the ultimate form of getting approval is approval is approval is climbing socially. climbing socially. climbing socially. >> So guilty. >> So guilty. >> So guilty. >> I'm I'm guilty, but then the problem is >> I'm I'm guilty, but then the problem is >> I'm I'm guilty, but then the problem is that there is no non-guilties out there.

that there is no non-guilties out there. that there is no non-guilties out there. >> After years of silence or obtuseness >> After years of silence or obtuseness >> After years of silence or obtuseness about policies and the people he worked about policies and the people he worked about policies and the people he worked with in Washington, Alan Greenspan opens with in Washington, Alan Greenspan opens with in Washington, Alan Greenspan opens up in his book, revealing his personal up in his book, revealing his personal up in his book, revealing his personal feelings about the six presidents he feelings about the six presidents he feelings about the six presidents he knew and worked for, starting with knew and worked for, starting with knew and worked for, starting with Richard Nixon. Richard Nixon. Richard Nixon. Here's what you say in the book, that he Here's what you say in the book, that he Here's what you say in the book, that he was so profane, it would have made Tony was so profane, it would have made Tony was so profane, it would have made Tony Soprano blush. Soprano blush. Soprano blush. It was that bad? It was that bad? It was that bad? >> Oh, indeed. He sits down in the room >> Oh, indeed. He sits down in the room >> Oh, indeed. He sits down in the room and within the first 30 seconds utters and within the first 30 seconds utters and within the first 30 seconds utters more four-letter words than I had heard more four-letter words than I had heard more four-letter words than I had heard in the music business. in the music business. in the music business. >> [snorts] >> [snorts] >> [snorts] >> And I said, there's something >> And I said, there's something >> And I said, there's something extraordinarily wrong here. extraordinarily wrong here. extraordinarily wrong here. That there were two Nixons. That there were two Nixons. That there were two Nixons. >> Greenspan writes that Nixon was >> Greenspan writes that Nixon was >> Greenspan writes that Nixon was anti-Semitic, anti-Italian, anti-Greek, anti-Semitic, anti-Italian, anti-Greek, anti-Semitic, anti-Italian, anti-Greek, anti-Slovak. I don't know anybody he was anti-Slovak. I don't know anybody he was anti-Slovak. I don't know anybody he was pro. pro. pro. And Gerald Ford? And Gerald Ford? And Gerald Ford? >> Extraordinary human being. >> Extraordinary human being. >> Extraordinary human being. >> But he wasn't the smartest, you say. >> But he wasn't the smartest, you say. >> But he wasn't the smartest, you say. >> No, he was not the smartest. >> No, he was not the smartest. >> No, he was not the smartest. But he was the most normal.

But he was the most normal. But he was the most normal. >> And that's what you ended up admiring, >> And that's what you ended up admiring, >> And that's what you ended up admiring, the normality. the normality. the normality. >> Well, it was also the ethical base of >> Well, it was also the ethical base of >> Well, it was also the ethical base of the man. We'd be discussing policy and the man. We'd be discussing policy and the man. We'd be discussing policy and say, "Let's He says, 'Let's forget some say, "Let's He says, 'Let's forget some say, "Let's He says, 'Let's forget some of the facts and just the right thing to of the facts and just the right thing to of the facts and just the right thing to do for the economy.'" do for the economy.'" do for the economy.'" >> And the other presidents didn't focus >> And the other presidents didn't focus >> And the other presidents didn't focus to that extent. to that extent. to that extent. Of Ronald Reagan, he said he had an odd Of Ronald Reagan, he said he had an odd Of Ronald Reagan, he said he had an odd form of intelligence, which he used to form of intelligence, which he used to form of intelligence, which he used to improve the country's self-image. improve the country's self-image. improve the country's self-image. He writes that he had a {quote} terrible He writes that he had a {quote} terrible He writes that he had a {quote} terrible relationship with the first President relationship with the first President relationship with the first President George Bush, who pressured Greenspan George Bush, who pressured Greenspan George Bush, who pressured Greenspan publicly. publicly. publicly. >> And interest rates should be lower now. >> And interest rates should be lower now. >> And interest rates should be lower now. >> [applause] >> [applause] >> [applause] >> I was shocked because >> I was shocked because >> I was shocked because nobody talked about Federal Reserve nobody talked about Federal Reserve nobody talked about Federal Reserve policy in public. policy in public. policy in public. >> Was what they did improper? >> Was what they did improper? >> Was what they did improper? >> Oh, indeed, yes. >> Oh, indeed, yes. >> Oh, indeed, yes. >> They crossed a line in your view? >> They crossed a line in your view? >> They crossed a line in your view? >> Well, >> Well, >> Well, if you have, as we do by statute, an if you have, as we do by statute, an if you have, as we do by statute, an independent Federal Reserve, it clearly independent Federal Reserve, it clearly independent Federal Reserve, it clearly is in opposition to what the purpose of is in opposition to what the purpose of is in opposition to what the purpose of the law was.

the law was. the law was. >> President Bush later said it was >> President Bush later said it was >> President Bush later said it was Greenspan's fault he lost the election Greenspan's fault he lost the election Greenspan's fault he lost the election in '92 to Bill Clinton. in '92 to Bill Clinton. in '92 to Bill Clinton. Clinton was the only Democrat Greenspan Clinton was the only Democrat Greenspan Clinton was the only Democrat Greenspan served under, and he says the smartest served under, and he says the smartest served under, and he says the smartest of all the presidents he knew. of all the presidents he knew. of all the presidents he knew. >> Even though I clearly was a Republican, >> Even though I clearly was a Republican, >> Even though I clearly was a Republican, I had to admit that he was an I had to admit that he was an I had to admit that he was an extraordinarily effective president. extraordinarily effective president. extraordinarily effective president. >> You seem to have gotten along with him >> You seem to have gotten along with him >> You seem to have gotten along with him best of all your presidents. best of all your presidents. best of all your presidents. >> That's right, yeah. >> That's right, yeah. >> That's right, yeah. >> I mean, you >> I mean, you >> I mean, you >> The bottom line is what he called our >> The bottom line is what he called our >> The bottom line is what he called our relationship when he said, "We, I think, relationship when he said, "We, I think, relationship when he said, "We, I think, are the odd couple." are the odd couple." are the odd couple." >> I asked what he thought of Hillary. >> I asked what he thought of Hillary. >> I asked what he thought of Hillary. >> Very smart. >> Very smart. >> Very smart. Uh Uh Uh she and I she and I she and I got along reasonably well. got along reasonably well. got along reasonably well. >> Um do you think she can handle the >> Um do you think she can handle the >> Um do you think she can handle the presidency? presidency? presidency? >> Certainly. >> Certainly. >> Certainly. Well, I think she's unquestionably Well, I think she's unquestionably Well, I think she's unquestionably capable. The question is is she the best capable. The question is is she the best capable. The question is is she the best person for the job? person for the job? person for the job? >> And? >> And? >> And? >> Uh my tendency would be to vote >> Uh my tendency would be to vote >> Uh my tendency would be to vote Republican. Republican. Republican. >> We all know that when Chairman Greenspan >> We all know that when Chairman Greenspan >> We all know that when Chairman Greenspan talks, the world listens.

talks, the world listens. talks, the world listens. >> He got so close to Clinton and his >> He got so close to Clinton and his >> He got so close to Clinton and his economic team that he began visiting the economic team that he began visiting the economic team that he began visiting the White House as often as once a month, White House as often as once a month, White House as often as once a month, something his predecessors had not done. something his predecessors had not done. something his predecessors had not done. >> What what was going on? >> What what was going on? >> What what was going on? >> Well, I was basically being an economic >> Well, I was basically being an economic >> Well, I was basically being an economic consultant, which is consultant, which is consultant, which is >> But but is that proper for the Fed >> But but is that proper for the Fed >> But but is that proper for the Fed chairman to become an economic chairman to become an economic chairman to become an economic consultant of of the administration consultant of of the administration consultant of of the administration given given given the need for the appearance of total the need for the appearance of total the need for the appearance of total independence? independence? independence? >> We are one government. >> We are one government. >> We are one government. Uh the Federal Reserve is not the Uh the Federal Reserve is not the Uh the Federal Reserve is not the foreign enemy. foreign enemy. foreign enemy. I was very knowledgeable about lots of I was very knowledgeable about lots of I was very knowledgeable about lots of different subjects. Me for instance. different subjects. Me for instance. different subjects. Me for instance. >> But you were influencing the >> But you were influencing the >> But you were influencing the policy. policy. policy. >> I I hope I was. >> I I hope I was. >> I I hope I was. >> That was behind the scenes. In public, >> That was behind the scenes. In public, >> That was behind the scenes. In public, Greenspan was inscrutable whenever Greenspan was inscrutable whenever Greenspan was inscrutable whenever Congress asked about interest rates. He Congress asked about interest rates. He Congress asked about interest rates. He resorted to an indecipherable Delphic resorted to an indecipherable Delphic resorted to an indecipherable Delphic dialect known as Fedspeak. dialect known as Fedspeak. dialect known as Fedspeak. >> I would I would engage in some form of >> I would I would engage in some form of >> I would I would engage in some form of uh uh uh syntax destruction, syntax destruction, syntax destruction, which sounded as though I were answering which sounded as though I were answering which sounded as though I were answering the question, but in fact had not.

the question, but in fact had not. the question, but in fact had not. >> We showed him a tape of him at a >> We showed him a tape of him at a >> We showed him a tape of him at a hearing. hearing. hearing. >> Modest preemptive actions can obviate >> Modest preemptive actions can obviate >> Modest preemptive actions can obviate the need of more drastic actions at a the need of more drastic actions at a the need of more drastic actions at a later date, later date, later date, and that could destabilize the economy. and that could destabilize the economy. and that could destabilize the economy. >> Very profound. >> Very profound. >> Very profound. >> Very profound. >> Very profound. >> Very profound. >> It basically >> It basically >> It basically >> Impenetrably profound. And so you did >> Impenetrably profound. And so you did >> Impenetrably profound. And so you did you worked on these, right? you worked on these, right? you worked on these, right? >> Oh, of Of >> Oh, of Of >> Oh, of Of >> You worked on making it even more But, >> You worked on making it even more But, >> You worked on making it even more But, what would often happen is you'd get two what would often happen is you'd get two what would often happen is you'd get two newspapers with opposing headlines newspapers with opposing headlines newspapers with opposing headlines coming out of the same hearing. coming out of the same hearing. coming out of the same hearing. >> I succeed I succeeded. >> I succeed I succeeded. >> I succeed I succeeded. >> Chairman Alan became Saint Alan during >> Chairman Alan became Saint Alan during >> Chairman Alan became Saint Alan during the robust Clinton years, getting much the robust Clinton years, getting much the robust Clinton years, getting much of the credit for the booming economy, of the credit for the booming economy, of the credit for the booming economy, budget surpluses, and soaring markets. budget surpluses, and soaring markets. budget surpluses, and soaring markets. >> You became a rock star. >> You became a rock star. >> You became a rock star. You did. Say now, people were coming up You did. Say now, people were coming up You did. Say now, people were coming up to you in the street as I understand it. to you in the street as I understand it. to you in the street as I understand it. Tell me if this is true. Thanking you Tell me if this is true. Thanking you Tell me if this is true. Thanking you for the growth in their 401(k)s. for the growth in their 401(k)s. for the growth in their 401(k)s. >> Wall Street, whose profits soared during >> Wall Street, whose profits soared during >> Wall Street, whose profits soared during his tenure, loved Greenspan, too. his tenure, loved Greenspan, too. his tenure, loved Greenspan, too. They called him Easy Al for his tendency They called him Easy Al for his tendency They called him Easy Al for his tendency to slash rates and make money cheap when to slash rates and make money cheap when to slash rates and make money cheap when the markets went down.

the markets went down. the markets went down. Greenspan's most criticized move as Fed Greenspan's most criticized move as Fed Greenspan's most criticized move as Fed chair came at the start of George Bush's chair came at the start of George Bush's chair came at the start of George Bush's term when he supported tax reductions. term when he supported tax reductions. term when he supported tax reductions. His testimony, while careful, was read His testimony, while careful, was read His testimony, while careful, was read as an endorsement of Bush's massive tax as an endorsement of Bush's massive tax as an endorsement of Bush's massive tax cuts. cuts. cuts. >> Having a tax cut in place may in fact do >> Having a tax cut in place may in fact do >> Having a tax cut in place may in fact do noticeable good. noticeable good. noticeable good. >> Greenspan had been saying that the >> Greenspan had been saying that the >> Greenspan had been saying that the surplus should be used to shore up surplus should be used to shore up surplus should be used to shore up Social Security and Medicare. But, he Social Security and Medicare. But, he Social Security and Medicare. But, he writes that he came to favor a tax cut writes that he came to favor a tax cut writes that he came to favor a tax cut because he thought without one the because he thought without one the because he thought without one the surplus would get too large. surplus would get too large. surplus would get too large. Yeah, but why didn't you think that Yeah, but why didn't you think that Yeah, but why didn't you think that Congress would never have allowed it to Congress would never have allowed it to Congress would never have allowed it to get that far? Why wouldn't you think get that far? Why wouldn't you think get that far? Why wouldn't you think they would spend it on education, on they would spend it on education, on they would spend it on education, on bridges, on roads, or whatever they did? bridges, on roads, or whatever they did? bridges, on roads, or whatever they did? >> Because they could have and the the >> Because they could have and the the >> Because they could have and the the numbers were still large enough. So, I numbers were still large enough. So, I numbers were still large enough. So, I never explicitly stated never explicitly stated never explicitly stated that I was in favor of the Bush tax cut. that I was in favor of the Bush tax cut. that I was in favor of the Bush tax cut. That's what the Bush administration That's what the Bush administration That's what the Bush administration interpreted, but I never said I was I interpreted, but I never said I was I interpreted, but I never said I was I was in favor of a tax cut.

was in favor of a tax cut. was in favor of a tax cut. >> Several newspapers, when you testified, >> Several newspapers, when you testified, >> Several newspapers, when you testified, said that this was that you'd done this said that this was that you'd done this said that this was that you'd done this for political reasons. for political reasons. for political reasons. That you did it to, you know, win the That you did it to, you know, win the That you did it to, you know, win the hearts of the Bush people. Did you hearts of the Bush people. Did you hearts of the Bush people. Did you succumb to pressure from the White succumb to pressure from the White succumb to pressure from the White House? House? House? >> No, not at all. They did they they they >> No, not at all. They did they they they >> No, not at all. They did they they they never spoke to me about this. I mean, never spoke to me about this. I mean, never spoke to me about this. I mean, look, you can only say what you believe. look, you can only say what you believe. look, you can only say what you believe. I I went back over that testimony. I I went back over that testimony. I I went back over that testimony. And I must tell you I would not change a And I must tell you I would not change a And I must tell you I would not change a word of it. word of it. word of it. >> Even knowing the outcome? >> Even knowing the outcome? >> Even knowing the outcome? >> yeah. >> yeah. >> yeah. >> The outcome, the surplus evaporated and >> The outcome, the surplus evaporated and >> The outcome, the surplus evaporated and the deficits returned. Greenspan had the deficits returned. Greenspan had the deficits returned. Greenspan had proposed that in that case, the Bush proposed that in that case, the Bush proposed that in that case, the Bush administration adjust and trim back the administration adjust and trim back the administration adjust and trim back the tax cuts, but that never happened. tax cuts, but that never happened. tax cuts, but that never happened. >> Well, remember that their economic >> Well, remember that their economic >> Well, remember that their economic policy largely policy largely policy largely was to take the proposals made during was to take the proposals made during was to take the proposals made during the campaign the campaign the campaign when there was a prospective very large when there was a prospective very large when there was a prospective very large surplus surplus surplus and that those policies continued in and that those policies continued in and that those policies continued in place irrespective of what was happening place irrespective of what was happening place irrespective of what was happening to the surplus. to the surplus. to the surplus. >> Well, that's not that's very rigid.

>> Well, that's not that's very rigid. >> Well, that's not that's very rigid. >> I don't know if it was rigid, it was >> I don't know if it was rigid, it was >> I don't know if it was rigid, it was wrong. wrong. wrong. >> Greenspan says he was especially >> Greenspan says he was especially >> Greenspan says he was especially surprised and disappointed by his old surprised and disappointed by his old surprised and disappointed by his old friend Dick Cheney. friend Dick Cheney. friend Dick Cheney. >> He was >> He was >> He was um um um much less much less much less uh focused on restraining spending than uh focused on restraining spending than uh focused on restraining spending than I would have liked. I would have liked. I would have liked. >> Well, actually Cheney has said deficits >> Well, actually Cheney has said deficits >> Well, actually Cheney has said deficits don't matter. don't matter. don't matter. >> Well, I think he was mistaken on that. >> Well, I think he was mistaken on that. >> Well, I think he was mistaken on that. >> So, these are your new offices? >> So, these are your new offices? >> So, these are your new offices? Greenspan is out of government now for Greenspan is out of government now for Greenspan is out of government now for the first time in 20 years. He set up an the first time in 20 years. He set up an the first time in 20 years. He set up an economic forecasting firm, Greenspan economic forecasting firm, Greenspan economic forecasting firm, Greenspan Associates, and he predicts the current Associates, and he predicts the current Associates, and he predicts the current fear sweeping the markets will subside. fear sweeping the markets will subside. fear sweeping the markets will subside. >> Do you think that this is really going >> Do you think that this is really going >> Do you think that this is really going to have deep lasting effect throughout to have deep lasting effect throughout to have deep lasting effect throughout the the economy, jobs, consumer the the economy, jobs, consumer the the economy, jobs, consumer spending? spending? spending? >> It's not clear yet and it will not be >> It's not clear yet and it will not be >> It's not clear yet and it will not be clear for quite a while. This is clear for quite a while. This is clear for quite a while. This is fundamentally originally caused by the fundamentally originally caused by the fundamentally originally caused by the flattening out of home prices and that flattening out of home prices and that flattening out of home prices and that is only now just beginning.

is only now just beginning. is only now just beginning. Prices are going to fall further. Prices are going to fall further. Prices are going to fall further. >> Well, what we've already begun to see is >> Well, what we've already begun to see is >> Well, what we've already begun to see is not just that housing prices are not just that housing prices are not just that housing prices are falling, but that it's affecting the job falling, but that it's affecting the job falling, but that it's affecting the job market for anything related to housing, market for anything related to housing, market for anything related to housing, including real estate, including the including real estate, including the including real estate, including the sales of appliances and furniture. sales of appliances and furniture. sales of appliances and furniture. >> But, >> But, >> But, there is an underlying strength in the there is an underlying strength in the there is an underlying strength in the United States, and indeed, when you look United States, and indeed, when you look United States, and indeed, when you look around the world, even with this around the world, even with this around the world, even with this extraordinary credit problem, extraordinary credit problem, extraordinary credit problem, the economies seem to be holding up. the economies seem to be holding up. the economies seem to be holding up. For the moment, it does not look For the moment, it does not look For the moment, it does not look sufficiently severe sufficiently severe sufficiently severe that it will spiral into anything that it will spiral into anything that it will spiral into anything deeper. We're going to get through this deeper. We're going to get through this deeper. We're going to get through this particular credit crunch. We always do. particular credit crunch. We always do. particular credit crunch. We always do. This is a human behavior phenomenon, and This is a human behavior phenomenon, and This is a human behavior phenomenon, and it will pass. The fever will break, and it will pass. The fever will break, and it will pass. The fever will break, and euphoria will start to come back again. euphoria will start to come back again. euphoria will start to come back again. >> But, he does see clouds on the horizon. >> But, he does see clouds on the horizon. >> But, he does see clouds on the horizon. >> Over the long run, >> Over the long run, >> Over the long run, this is not going to be what our problem this is not going to be what our problem this is not going to be what our problem is.

is. is. Our problem over the long run is the Our problem over the long run is the Our problem over the long run is the reemergence of inflation. reemergence of inflation. reemergence of inflation. >> This is interesting cuz in your book, >> This is interesting cuz in your book, >> This is interesting cuz in your book, your outlook on the broad future is your outlook on the broad future is your outlook on the broad future is pretty gloomy. pretty gloomy. pretty gloomy. >> Well, >> Well, >> Well, >> interest rates going up, you say. >> interest rates going up, you say. >> interest rates going up, you say. >> Yes. >> Yes. >> Yes. >> Inflation going up. >> Inflation going up. >> Inflation going up. >> Yes. Indeed, >> Yes. Indeed, >> Yes. Indeed, I in fact have a line in the book where I in fact have a line in the book where I in fact have a line in the book where saying this looks pretty gloomy. saying this looks pretty gloomy. saying this looks pretty gloomy. >> When he was chairman, his public >> When he was chairman, his public >> When he was chairman, his public statements had enormous impact. He's statements had enormous impact. He's statements had enormous impact. He's finding out they still do. In February, finding out they still do. In February, finding out they still do. In February, he rattled the markets by predicting he rattled the markets by predicting he rattled the markets by predicting there was a one in three chance of a there was a one in three chance of a there was a one in three chance of a recession this year. It forced the recession this year. It forced the recession this year. It forced the current chairman, Ben Bernanke, to try current chairman, Ben Bernanke, to try current chairman, Ben Bernanke, to try and calm things down, and raise and calm things down, and raise and calm things down, and raise questions about the propriety of his questions about the propriety of his questions about the propriety of his speaking out. speaking out. speaking out. >> This isn't like any normal forecaster >> This isn't like any normal forecaster >> This isn't like any normal forecaster going public. going public. going public. >> So, what? So, I then become >> So, what? So, I then become >> So, what? So, I then become incarcerated, and I'm not allowed to do incarcerated, and I'm not allowed to do incarcerated, and I'm not allowed to do anything because I might say something? anything because I might say something? anything because I might say something? >> What is your responsibility? Let's put >> What is your responsibility? Let's put >> What is your responsibility? Let's put it in those terms. it in those terms. it in those terms. >> is what I am doing now. I'm not >> is what I am doing now. I'm not >> is what I am doing now. I'm not commenting on monetary policy. I'm commenting on monetary policy. I'm commenting on monetary policy. I'm commenting on global things. I just commenting on global things. I just commenting on global things. I just >> Yeah, but the the comment that has most >> Yeah, but the the comment that has most >> Yeah, but the the comment that has most people upset was your prediction about a people upset was your prediction about a people upset was your prediction about a recession that you shouldn't be recession that you shouldn't be recession that you shouldn't be commenting on those kind on recession commenting on those kind on recession commenting on those kind on recession inflation.

inflation. inflation. >> But how am I going to pursue my >> But how am I going to pursue my >> But how am I going to pursue my profession without doing precisely that? profession without doing precisely that? profession without doing precisely that? >> Well, you know, sometimes people in >> Well, you know, sometimes people in >> Well, you know, sometimes people in Congress have this rule that they can't Congress have this rule that they can't Congress have this rule that they can't work in related fields or can't become a work in related fields or can't become a work in related fields or can't become a lobbyist for X amount of time. Should lobbyist for X amount of time. Should lobbyist for X amount of time. Should there be a respite here? there be a respite here? there be a respite here? >> There was. >> There was. >> There was. For a year I was not allowed For a year I was not allowed For a year I was not allowed to go lobby the Fed, which I think I to go lobby the Fed, which I think I to go lobby the Fed, which I think I never done and haven't done. never done and haven't done. never done and haven't done. >> No, no, I mean about speaking. >> No, no, I mean about speaking. >> No, no, I mean about speaking. >> Yeah, >> Yeah, >> Yeah, there's no restriction on speaking. there's no restriction on speaking. there's no restriction on speaking. >> Should there be? >> Should there be? >> Should there be? >> No. >> No. >> No. >> Should you impose one yourself? >> Should you impose one yourself? >> Should you impose one yourself? >> No. >> No. >> No. >> When he's not working these days, he >> When he's not working these days, he >> When he's not working these days, he does what he's always done to relax. does what he's always done to relax. does what he's always done to relax. Yep, he flips through government reports Yep, he flips through government reports Yep, he flips through government reports with all those geeky numbers. with all those geeky numbers. with all those geeky numbers. >> He loves these data. I mean I mean look >> He loves these data. I mean I mean look >> He loves these data. I mean I mean look at this stuff here. at this stuff here. at this stuff here. >> This is his stuff? >> This is his stuff? >> This is his stuff? >> And this is the his morning meeting. >> And this is the his morning meeting. >> And this is the his morning meeting. >> This is his Bureau of Labor Statistics >> This is his Bureau of Labor Statistics >> This is his Bureau of Labor Statistics productivity and cost. This is your sit productivity and cost. This is your sit productivity and cost. This is your sit down over the cup of coffee in the down over the cup of coffee in the down over the cup of coffee in the morning. morning. morning. >> Oh yeah, yeah. I just love getting into >> Oh yeah, yeah. I just love getting into >> Oh yeah, yeah. I just love getting into the detail the detail the detail of the protein content of hard red of the protein content of hard red of the protein content of hard red winter wheat was because winter wheat was because winter wheat was because the differential in price the differential in price the differential in price >> [laughter] >> [laughter] >> [laughter] >> differential in price between Kansas >> differential in price between Kansas >> differential in price between Kansas City City City and Chicago was relevant. [snorts] It and Chicago was relevant. [snorts] It and Chicago was relevant. [snorts] It was It was romantic to me. That's what was It was romantic to me. That's what was It was romantic to me. That's what the That's what the joke is.

the That's what the joke is. the That's what the joke is. And I I'm still that way. I mean, I just And I I'm still that way. I mean, I just And I I'm still that way. I mean, I just love that stuff.