Greenspan’s Book Explores U.S. Economy, His Time as Fed Chairman
[Sorry, the video for this story has expired, but you can still read the transcript below. ]
GWEN IFILL: Finally, the conclusion of Jim Lehrer’s conversation with Alan Greenspan, the former Federal Reserve chairman. His new book, “The Age of Turbulence,” covers his tenure at the Fed, his own personal history, and some of the presidents he worked with, which is also the starting point for tonight’s discussion. The conversation was recorded last week.
JIM LEHRER: You wrote in your book very clearly that the two smartest presidents you ever dealt with were Richard Nixon and Bill Clinton. Explain the smartness of Richard Nixon.
ALAN GREENSPAN, Former Federal Reserve Chairman: He had an incredible ability to think on his feet very quickly. I would, for example, prior to a press conference when I was working for him during the 1968 campaign, brief him on an important economic event which had just occurred…
JIM LEHRER: Now, you were just a campaign aide at that point?
ALAN GREENSPAN: I was a voluntary…
JIM LEHRER: Voluntary adviser, right, right.
ALAN GREENSPAN: … adviser. And I would give him five minutes, a quick review of a number of technical issues about which he knew nothing. He’d get out in front of the press corps and, for 20 minutes, hold forth as though he was the world’s greatest expert on it.
JIM LEHRER: Based on what you just told him?
ALAN GREENSPAN: Because he was an extraordinarily good Wall Street lawyer. I mean, the man was — I was really impressed. But he had another side to him.
JIM LEHRER: Yes, I was going to add, you say he had a dark side. He had a scary side.
ALAN GREENSPAN: It was very frightening to spend a few months watching this staid Wall Street lawyer, former vice president, all of a sudden turn into a different person. And when they let me in on the inside, so to speak, my first exposure to that, I came away shaken. And…
JIM LEHRER: Was he attacking people and profanities?
ALAN GREENSPAN: Yes, it’s what you heard on the tapes, because when they originally didn’t want to let the tapes out, I said, “I know exactly why they don’t want to let the tapes out.”
JIM LEHRER: You knew what everybody was going to hear?
ALAN GREENSPAN: It was, I mean — I mean, I was in the music business. I shouldn’t be shocked by profanity, but you know something? I was.
Working with President Bill Clinton
JIM LEHRER: Wow. Wow.
All right, now define smart in Bill Clinton's terms.
ALAN GREENSPAN: Well, let me give you an example which tells you an awful lot about Bill Clinton. Bill Clinton is giving a State of the Union message, and somebody puts the wrong speech in the teleprompter.
JIM LEHRER: I remember that, yes.
ALAN GREENSPAN: And he was up there and nobody knew he was adlibbing. Now, I don't know anybody who could do that.
JIM LEHRER: Yes.
ALAN GREENSPAN: But more importantly...
JIM LEHRER: Your dealings with him, with your dealings with him.
ALAN GREENSPAN: Yes, my dealings with him on every issue, he understood all the technical aspects of various problems, and he got it. In other words, you could actually have a fairly abstract, complex discussion with him, and he would find mistakes in your logic, which is, in my case, very unusual.
JIM LEHRER: Yes.
ALAN GREENSPAN: And that was very impressive to me.
Greenspan's personal interests
JIM LEHRER: You mentioned music, a lot of personal -- a lot of your personal life is in this book.
ALAN GREENSPAN: Yes.
JIM LEHRER: And music played a big part in your life. Baseball played a big part in your life. And math played a big part. Connect them. Can you connect them? Are they all related?
ALAN GREENSPAN: Yes, in one way or another. The math was a big deal when I was very young and my mother used to parade me out...
JIM LEHRER: You grew up in New York City.
ALAN GREENSPAN: I grew up in New York City. And she would have me add 45 and 162 in my head, and I'm a kid, and so...
JIM LEHRER: You were just being kind of there as show-off boy.
ALAN GREENSPAN: I was a prop for parties.
JIM LEHRER: Yes, yes.
Turning to music and baseball
ALAN GREENSPAN: Then, I decided that baseball was my thing. And I was actually getting very good, but at the age of 14, I hit a plateau and I never improved.
JIM LEHRER: You were a left-hander, first baseman, right?
ALAN GREENSPAN: I was a left-handed first baseman. I hit the ball pretty well. Then, I got into music, and I became a professional musician for a couple of years.
JIM LEHRER: Played the clarinet...
ALAN GREENSPAN: Clarinet, saxophone, flute, bass clarinet.
JIM LEHRER: Which one did you enjoy the most?
ALAN GREENSPAN: I actually enjoyed the clarinet the best, but I was a fairly good amateur, but a moderate professional. But what really did me in is I had, as an amateur, had to play next to Stan Getz. I was 16; he was 15. I decided, "Do I really want to be in this business?"
JIM LEHRER: Why, because he was so good?
ALAN GREENSPAN: Oh, my god.
JIM LEHRER: Was he really good?
ALAN GREENSPAN: And he was one of the really historic famous sax players. And the best economic decision I ever made in my life was to decide to leave the music business and go into economics.
JIM LEHRER: Go into math, stick with math and economics. Finally, let me ask you this. You spent -- you were chairman of the Fed for 19 years, and you...
ALAN GREENSPAN: Almost.
JIM LEHRER: ... almost 19 years, and you never talked in public except for a congressional committee. You didn't do what you're doing right now.
ALAN GREENSPAN: I did not.
JIM LEHRER: You didn't answer questions of interviewers and all of that. And you've always said -- well, you tell me why you didn't talk, and why you're talking now.
ALAN GREENSPAN: One of the problems that surprised me when I got into public life was that open, clear talk often creates problems in this sense. I mean, let me give you an example, and you can see what the general principle is.
When at the Federal Reserve we would, in our meetings, for example, think in terms of, "Well, we're not going to change the interest rate this meeting, but there's a one chance in 10 we may want to do it in the next meeting." If we actually said exactly that, the markets would respond as though we actually had changed the rates, because, apparently, public officials are always presumed never to quite tell the truth and, as a consequence, market participants extrapolate.
And I quickly learned that I had to be very careful about what I said. And coming into public life, where every word I'm uttering has a market effect, you tend to be very cautious. And I found that I had better stay out of being constantly on television or something like that, because I will create far more problems than I would imagine.
JIM LEHRER: Are you still concerned that you, even now that you're no longer chairman of the Fed, your words still do matter to folks? Are you very careful even now what you say?
ALAN GREENSPAN: I have endeavored to be as insulated as I can get. In other words, in all of my meetings with people who are clients of mine, it's very clearly stated that these are all off-the-record, never to leave the room, and I'm successful 98 percent of the time. The 2 percent is very disturbing to me, but I don't know what to do about it.
JIM LEHRER: Yes, because you want to talk. You just want to make sure -- I understand.
ALAN GREENSPAN: Yes, in other words, I've been an economist since the latter part of the 1940s, and that's my profession. I love it. And I'm enjoying it, and I've been doing it with different employers for two or three generations, it seems like now.
And, you know, people say, "Well, you know, you just ought to keep quiet." And I say, "Why?" And they say, "Because your words mean something." I said, "You mean, if I was a lousy Federal Reserve chairman, nobody would care what I said? So I'm being punished because I'm supposed to be saying something people are interested in?"
Look, I'm fully aware of the fact that, in the early months of when I left office, that anything I would say could create a problem for my successor, Ben Bernanke. But, fortunately, he is now so ensconced now and his reputation is unquestioned -- I think he's doing an excellent job -- that I'm feeling a little more relaxed on the issue.
But I still try to keep as low a profile as I know how and, frankly, would prefer, after this book, which I have no choice but to come in and lay out what I'm saying in public, but I'm going to try to see if I can manage to work my way back to some degree of anonymity and privacy, although people tell me I'm insane.
JIM LEHRER: OK. Mr. Chairman, thank you very much and, again, congratulations on your book.
ALAN GREENSPAN: Thank you very much.