“………Greenspan, 88, who was chairman of the U.S. central bank for more than 18 years, from 1987 to 2006, managed to steer the economy through multiple crises, mainly by slashing rates and remaining upbeat. He suffered a remarkable fall from grace after leaving office and has apologized for trusting big banks too much. He has since gone back and re-examined his views on the economy.
Greenspan, now the president of Greenspan Associates LLC, an economic consulting firm, spoke to MarketWatch about the current stance of Fed policy, the economy and what to do about asset bubbles. The economy will do all right in the near term, he said, buoyed by a strong equity market, but he added that he remains worried that we could be facing another false dawn.
The interview has been edited for length and clarity.
MarketWatch: What is the biggest challenge facing the Fed?
Greenspan: How to unwind the huge increase in the size of its balance sheet with minimal impact. It is not going to be easy, and it is not obvious exactly how to do it….”
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