The Guru's book (click to visit Amazon site). Picture courtesy Penguin.
I have been reading Alan Greenspan's "The Age of Turbulence: Adventures in a New World" (ISBN 1594201315) over the past couple of days. This book is part autobiography, but given the stature of the man, the book gives an unique insight into how the Global economy has progressed since the War from the perspective of the most well known central banker of all times.
In the book, Alan declares his unflinching faith in Adam Smith's capitalist ideas. Interestingly he admits being deeply influenced by Ayn Rand's (sometimes extreme) beliefs in laissez-faire capitalism. Perhaps the fall of the Soviet system prior to his writing the book stoked the ferocity of Alan's pro-market capitalism beliefs in the book. Whatever the reasons, the fact that market capitalism remains the only time-tested successful economic system makes me comfortable with much of what he says on this topic.
But the book has a lot more to it. One of the interesting features is the interplay of monetary policy and politics in Washington described in the book. It is absolutely remarkable that Alan Greenspan successfully navigated a continuous 18-year term as Fed Chairman with presidents from either side of the political spectrum. Although Alan is a republican, he plainly states his poor opinion of George Bush and extols Bill Clinton"s economic policies. I believe that his ability to work with multiple administrations may also explain his ability to successfully tackle situations like the 87' stock market crash and the post 9/11 economic landscape.
The book explains the basic workings of the Fed in an easy-to-comprehend manner. You learn of technicalities like the Fed Fund rate and the Discount rate, the organizational structure of the Federal Reserve and its relation to the US Treasury, its mandate, etc. While this information is also available elsewhere, Alan brings facts to life by introducing the workings of the Fed through anecdotes and examples from his experience.
I am still on page 200. This is one of those rare books about which I hesitate to comment more before better understanding what the Guru wants us to hear. Stay tuned for more commentary on this superb book.