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Alan Greenspan, who died last week at age 100, led the Federal Reserve for nearly 19 years and served under four presidents. His tenure helped establish price stability as the foundation for sustainable economic growth, although his record also included policy decisions that contributed to the housing bubble.
New Fed Chair Kevin Warsh has openly invoked Greenspan as an influence. The comparison fits in some ways. Both men distrust conventional economic models, want better data, and place a heavy emphasis on controlling inflation. Warsh also appears willing to resist political pressure for lower interest rates, an essential test of any Fed chair.
But Warsh is not simply recreating the Greenspan Fed. He is reducing forward guidance, reconsidering how the Fed gathers and interprets data, and changing how policy alternatives are debated internally. Those changes may make the Fed more flexible, but less communication can also leave markets guessing about how officials will react to new information.
Fed chairs matter, but no chair is infallible. At PWM, we do not build plans around predicting the next rate move. We build them to absorb changing borrowing costs, bond yields, inflation, and market valuations without forcing a reaction every time the Fed changes course. Monetary policy matters, but it should influence the plan, not control it.
Kevin Warsh Invokes Alan Greenspan to Shrink the Fed and Strengthen Its Chair
by Nick Timiraos
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