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44 of 49 people found the following review helpful
3.0 out of 5 stars Tell Me Something I Don't Know., December 5, 2007
This review is from: The Age of Turbulence: Adventures in a New World (Hardcover)
Reaction to Alan Greenspan's much-anticipated memoir will undoubtedly vary widely depending upon the audience. "The Age of Turbulence" is part autobiography of the former Federal Reserve Chairman's professional life and part exposition of his views of the global economy, united by Greenspan's ongoing efforts to understand this new economy that is "vastly more flexible, resilient, open, self-correcting, and fast-changing than it was even a quarter century earlier." The book is written with the curious layperson in mind. In contrast to Fedspeak, Greenspan's style is straightforward and as fluid as it can be considering that he toils in the world of facts and figures. As a primer on the global economy, it is too long but basically good providing you don't take it as gospel.

Greenspan takes us through his Washington Heights childhood, his admiration for the ideas of Adam Smith and Ayn Rand, to his career in macroeconomic forecasting, then through 4 decades in public service, including nearly 19 years as Chairman of the Fed. If you're looking for the rationale behind the Fed lowering the fund rate 3 times in fall 1998, mid-tech stock bubble, or decreasing the rate to 1% in 2003 and leaving it there for a year, precipitating a housing and credit bubble, well....there's not much here. He justifies 1998 with some nebulous notion of a "small by real risk" of global malaise. He justifies 2003 as an urgent effort to avert deflation. That's funny, because if the CPI were calculated by the same method as when Greenspan raised rates to combat inflation in 1987, his first action as Chairman, the inflation rate would have been 4%. By "funny", I mean "disingenuous".

In the second half of the book, Greenspan presents his conclusions about the state of the global economy and its future. He begins with a brief history of capitalism and goes on to discuss, chapter by chapter, the economic successes and challenges of recent decades in Japan, China, India, Russia, and Latin America. He argues for less consternation over the US trade deficit, against protectionism and most regulation, and analyzes the state of Social Security and energy supply and consumption. I found his view of Latin America's "economic populism", which lacks the conceptual framework of socialism, insightful. He is dismissive of Russia's accomplishments under Putin. And he should avoid the subjects of education and workforce skills, as he demonstrates ignorance there.

Alan Greenspan is an articulate and convincing spokesman for market capitalism and globalization. He explains the transition from manufacturing to a service economy in the US in a way that anyone can understand. This is where "The Age of Turbulence" excels. But he is an apologist for free-spending neocons and Boris Yeltsin, of all people. Too much of his analysis is based on understated inflation rates, which he should well know, since he was instrumental in trying to change the way CPI is calculated. I always regarded Greenspan as a smart man, well-intentioned, but dangerously susceptible to political pressures. After reading what he has to say, I think less of him, even though I am generally in agreement with his economic worldview. Bright, educated, but politically naÔve and wanting far too much to be liked, Greenspan is too ingratiating and his rationalizations too clumsy in print. After 500 pages of this, I feel it wasn't worth my time.
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Initial post: Oct 25, 2009 4:52:21 PM PDT
Last edited by the author on Oct 26, 2009 8:25:31 PM PDT

I have also read this book and have an economics background and disagree with your comments on using a past CPI index. The CPI has to change to reflect changes in the economy otherwise it becomes irrelevant.

The CPI was close to 0 in 2003 with no change in the Fed rate until June 2004. To blame the bubble soley on the Fed's low interest rate is far reaching. The IMF report of 2005 states China was a primary driver supplying excess liquidity throuhout the world. In fact the Chinese savings rate in 2002 was close to 50%, not the 32% Greenspan was quoting. In the "Conundrum" chapter, Greenspan describes his dilema of increasing the Fed rate with no effect on the interest rate due to the excess liquidity from China. The US wasn't the only country experiencing these low interest rates.

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