Alan Greenspan, RIP - by Scott Sumner

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Alan Greenspan, RIP<br>Plus links from June 2026

Scott Sumner<br>Jun 26, 2026

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Before getting into links, a few comments on recent events:<br>Alan Greenspan was clearly one of the greatest Fed chairs, perhaps the greatest. But I evaluate his tenure a bit differently than many other pundits. Here are a few contrarian views:<br>While Greenspan did a great job producing stable NGDP growth during his tenure (1987-2006), there is no reason to believe that he would have done better than Bernanke during 2008, indeed his public comments about monetary policy during 2008-09 suggest that he was just as off base as the Fed.

On the other hand, Greenspan gets way too much blame for the 2008 financial crisis, which was not caused by “deregulation”, whatever that means. Indeed the regulators were pressing banks to do more high risk lending. If you want more regulation, does that mean you wanted the regulators to press banks harder to make subprime loans? Or are you assuming disinterested, omniscient regulators? The financial crisis was caused by a combination of moral hazard (FDIC and Too-Big-To-Fail) plus tight money. Greenspan’s biggest mistake in this area was the 1998 LTCM rescue, which slightly worsened moral hazard.

Don’t think of 1987-2006 as the “Greenspan era”, think of it as the “NeoKeynesian consensus era.” It wasn’t just the Fed, almost all the major central banks figured out how to do inflation targeting using a Taylor principle-type approach, and this largely explains why other developed countries had the same sort of inflation targeting success as America during this period.

In 1996, Greenspan spoke of “irrational exuberance” in the stock market. Years later, that warning was viewed as a prescient call, even though he was pretty clearly wrong. Stocks were not overvalued in 1996. This is just one of many examples of how human thinking is biased toward finding “bubbles” where they do not in fact exist.

Greenspan’s strongest attribute was his willingness to take seriously the information contained in asset prices.

Posts by Marcus Nunes, Lars Christensen, and Stephen Kirchner have good discussions of Greenspan’s legacy.<br>As a Milwaukee Bucks fan I cannot help commenting on the recent trade of Giannis Antetokounmpo to the Miami Heat. Casual fans have begun underrating Giannis in a couple ways. First, he gets blamed for the recent decline of the Bucks, which is actually due to the fact that 10 years of horrible drafting, bad trades, and bad injury luck produced a team lacking in talent. Second, people overestimate how often he’s injured. He only completely missed one playoff due to injury, plus a few isolated playoff games in other years, including the title year (2021.) In his 13 regular seasons, last year was the first time Giannis missed a lot of games, and that was partly due to the team holding him out when healthy in order to tank. He is an injury risk due to his age, size and style of play, but his injury history is not that bad. The amazing 2021 recovery from a severe knee injury right before the finals shows that he’s a quick healer. The betting market agrees with me—pushing Miami up to #5 in title odds (ahead of Denver), and disagrees with casual fans who view him as overrated. He’s clearly still a top 5 player, closer to #1 than #6. This will be the standard view by late November. (Boston understood, offering Jaylen Brown plus two firsts for Giannis.)<br>Last year, I discussed the fact that mixed race players were increasingly common in the NBA. I noticed that 5 of the top 13 picks in this year’s draft had one black parent and one white parent, including Milwaukee’s two picks (at #10 and #13.)<br>And now for my links:<br>The media won’t report this:

Oops, the Economist is part of the media, so I guess the media will report it.<br>Andrew McCarthy has a good piece on how to think about abuse of power. Hard to excerpt, but the key point is that illegal acts aren’t necessarily impeachable, and impeachable offenses aren’t necessarily illegal.

The US isn’t the only country shooting itself in the foot. Here’s Bloomberg:

China is restricting overseas travel for top AI professionals in private firms, requiring them to get approval from relevant authorities before embarking on overseas travel.<br>The government is targeting talent within the AI sphere, including startup founders, researchers, and executives, and adding individuals to the list based on assessments of their critical importance to the country.<br>The restrictions risk undermining the ability of AI firms in China to recruit and retain talent, and may force engineers with global ambitions to choose between staying home or going abroad earlier in their careers.

What sort of society would actually allow freedom of choice?

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