Word: feds
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Dates: during 1980-1989
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Economists who know Greenspan admire him personally and professionally. University of Minnesota Professor Walter Heller believes Greenspan has the perfect temperament for his new post. Says Heller: "He doesn't show his emotions. The Fed chairman has to have the capacity for forthright evasion and controlled obfuscation, and Alan is very good at that. ((Former Chairman)) Arthur Burns puffed on a pipe. Volcker puffed on cigars. Alan does not smoke, but when required, he can set up a nice smoke screen with words...
Greenspan's good fortune, however, created a small problem. With his new job, the Fed chairman will step down from TIME's Board of Economists, where he has served for 14 years. The task of searching for new members of the board, which is carefully chosen to represent diverse economic and political viewpoints, has become something of a regular activity during the past decade. Since the board was founded in 1969 to swap views on economic trends with TIME's editors, four members -- Greenspan, Murray Weidenbaum, Martin Feldstein and Beryl Sprinkel -- have left to serve as chairman of the Council...
Greenspan admitted that it would be a "major challenge to fill Volcker's shoes." By law, the activities of the Fed are insulated from White House or congressional interference, but Volcker's imposing presence (he is 6 ft. 7 in.) and his supremely assertive stance have over the years added more substance and clout to the Fed's famed independence. Indeed, in many foreign capitals, Volcker has been viewed as virtually the sole guarantee of sound American monetary policies, immune to political pressure. One commentator went so far last week as to describe him as a "financial demigod...
...draws nearer. Indeed, some Administration critics argued last week that Greenspan's surprise appointment already amounted to just such political meddling. Said Pierre Rinfret, a former Nixon Administration economic adviser and now a Wall Street consultant: "It's a real watershed. President Reagan has now succeeded in turning the Fed into an arm of the Administration...
Most experts would consider that charge hyperbolic if not downright false. Still, the change at the Fed was unsettling enough to cause considerable zigzagging in world financial markets. Within minutes of Reagan's announcement, the Dow Jones average of 30 industrial stocks dropped 22 points, and bond prices suffered their worst one-day drubbing in more than five years. But the Dow bounced back by 42.47 the next day and closed on Friday at 2326.15, up 34.58 points for the week, while bond prices also recovered much of their loss. In Tokyo the U.S. dollar, which has lost about...