According to reports, on June 22, 2026, former Federal Reserve Chairman Alan Greenspan passed away at his home in Washington, D.C., at the age of 100. This legendary figure, who led the Fed for 19 years (1987-2006) through six presidencies, left behind a legacy full of contradictions and controversies—a stark reminder for every generation to stay sober in the face of frenzy.
From Jazz Musician to “Economic Maestro”
Born in 1926 in New York to a Jewish financial family, Greenspan had a childhood marked by his parents’ divorce, making him introverted and solitary. His first dream wasn’t about economic data or interest rates but about swinging jazz notes. He once enrolled at the world-famous Juilliard School to study clarinet and saxophone, but the rigid training couldn’t hold his longing for improvisation and freedom. Soon, he dropped out and became a professional jazz musician, playing in smoky nightclubs near Times Square, blowing out the confusion and passion of that era. But the music dream eventually faded before reality. He turned to New York University, diving into economics, earning both a bachelor’s and a master’s degree—his first transformation from an artist to a rationalist.
In 1954, Greenspan joined a small consulting firm. With his incredible sensitivity to data and solid analytical skills, he owned half the company within five years and renamed it Townsend-Greenspan & Co. While thriving in business, he made a name in politics with an article, “Gold and Economic Freedom,” predicting a severe inflation in the U.S. In 1974, President Ford appointed him as Chairman of the Council of Economic Advisers, marking his official shift from a Wall Street businessman to a Washington insider. In 1987, President Reagan appointed him to lead the Fed, kicking off a legendary tenure of 18 years, 5 months, and 20 days.
Just two months into the job, Greenspan faced his first big test. On October 19, 1987, the Dow Jones Industrial Average plunged 22.6% without warning—the largest single-day percentage drop since 1941, later called “Black Monday.” Wall Street was in a panic, and global markets collapsed in a chain reaction, wiping out about $500 billion in market cap within hours. Greenspan didn’t hesitate. He defied traditional dogma and ordered a massive injection of liquidity into the financial system. He issued a short, powerful statement promising the Fed would act as a “source of liquidity” to support the system. This move quickly stabilized the market, and he earned the market’s initial trust.
Over the next decade or so, Greenspan steered the U.S. economy through two recessions, the Asian financial crisis, and the aftermath of 9/11. Especially during the Clinton years, the economy showed an unprecedented picture of stability—low inflation, low unemployment, high growth. At that time, Greenspan was at the peak of his prestige. The media called him “Maestro,” and Wall Street had a famous saying: “It doesn’t matter who’s president, as long as Alan is the Fed chair.” To the public, he was practically the embodiment of prosperity. The mere thickness of his briefcase could move global markets.
“Irrational Exuberance” and Contradictory Policies
But beneath the glory, trouble was brewing. Greenspan’s most famous warning is “irrational exuberance,” a phrase he coined in 1996 to describe the stock market frenzy. It was meant as a timely brake signal, yet his later policies ended up doing the opposite.
To combat the bursting of the dot-com bubble and the economic shock of 9/11, Greenspan launched an unprecedented cycle of massive rate cuts. He slashed the federal funds rate to a historic low of 1% and kept it there for a long time. This cheap liquidity became the most powerful fuel for the next big speculative bubble—the housing bubble. Critics say his over-reliance on rate cuts to “rescue the market” planted the seeds for the subprime crisis.
If low rates were the fuse, deregulation was the accelerant. Greenspan had long believed in the market’s ability to self-correct. He fiercely opposed regulating financial derivatives and helped push for the repeal of the Glass-Steagall Act, which separated commercial and investment banking. These policies gave Wall Street’s financial innovation a green light but also created a regulatory vacuum. Toxic subprime mortgage products were born, packaged, and spread, eventually tying the entire global financial system to a ticking time bomb.
In 2008, the global financial crisis hit like a tsunami. Lehman Brothers collapsed, and AIG was on the brink. This worst crisis since the Great Depression became a turning point for Greenspan’s reputation. The bipartisan Financial Crisis Inquiry Commission cited his long-promoted deregulation as a key cause of the crisis. The “Maestro” was now sarcastically called “Mr. Bubble” by the media and the public. Nobel laureate Paul Krugman even called him “the worst Fed chair in history.”
Facing public anger, an aging Greenspan testified before Congress in October 2008. Under questioning about the crisis, he was no longer the “Maestro” who could control the room with vague statements. He admitted he had a far-from-adequate understanding of the crisis and confessed that the free-market theory he had believed in all his life—that financial institutions could and should self-regulate—had a major flaw. He used the word “shocked” to describe his feelings upon realizing this mistake.
When Faith Replaces Rules, Who Remembers the Lesson?
The fall from “Maestro” to “Mr. Bubble” is so dramatic that Greenspan’s life reads like half of modern U.S. economic history. It leaves a timeless warning: when faith in a person replaces respect for rules, and when short-term policy victories mask long-term structural risks, the deepest crisis often hides behind the loudest applause.
As Li Daokui, dean of the Institute for Chinese Economic Thought and Practice at Tsinghua University, once said, “Greenspan represents the peak of American-style free-market confidence, but also exposes its blind spots. His legacy reminds us to be cautious about worshipping any economic ‘master,’ because the essence of economics is dealing with people themselves, who are full of uncertainty.”
In his later years, Greenspan tried to patch up his theories. In his book “The Map and the Territory,” he introduced “animal spirits” to explain irrational market behavior, admitting that fear and frenzy can upend economic models. But he defended the free market to the end, arguing that populism and excessive government intervention pose a greater threat to markets than the greed of financial institutions.
Now, as we stand at the dawn of a roaring AI era, Greenspan’s lesson feels painfully relevant. From Silicon Valley to Wall Street, from OpenAI to Nvidia, countless investors and policymakers are placing near-religious faith in the limitless potential of AI. It’s as if this “technological revolution” can finally break free from all historical cycles. The phrase “this time is different” is once again echoing through capital markets.
But Greenspan’s story reminds us: every bubble is born from some absolute “faith.” When a society’s belief in a person, a technology, or an idea completely replaces respect for rules, checks, and common sense, the seed of a bubble is already planted.
