Collegian

Alan Greenspan, chairman of the Federal Reserve, the central bank of the United States, retired on Jan. 31, ending his nearly 19 years of economic leadership. 

Greenspan's legacy spans the 10-year enlargement of the economy to the lingering slow-down of 2003, according to Infoplease.com.  Hallmarks of his career span from the New York Stock Exchange surpassing its trade volume of 10,000 during the Clinton era to record low interest rates under the George W. Bush administration.

His influence on American economics has been felt since the Ford administration, when he served as chairman of the Council of the President's Economic Advisers from 1974 to 1977, according to Infoplease.com. Greenspan was appointed for the first time as chairman of the Federal Reserve System in 1987 by President Ronald Reagan. He stayed on through reappointment by Presidents George W. H. Bush, Bill Clinton, and George W. Bush, according to Infoplease.com.

Early in his career as chairman of the central bank, rather than sponsoring economic expansion, Greenspan underlined inflation control.  But then the sluggish economics of 2003 raised concern over the deflation of the economy.  He carefully adjusted the prime interest rates, the amount banks charge other banks for loans, to keep inflation down, which did slowly increase economic growth, according to Infoplease.com.

The GDP or gross domestic product, combined final value of good and services within the U.S. for the fourth quarter of 2005, increased at a rate of 1.1 percent, according to the Bureau of Economic Analysis.

According to the Jan. 7, 2006 edition of the Economist magazine, the US GPD is forecasted to grow at a rate of 3.3 percent. Which is modest in comparison to China's expected growth of 9.4 percent.  In terms of business confidence, that is the how domestic economies are ranked by business people, the US stands at about 30 in 2006, but at nearly 75 in 2005. Compared to China which stands at about 75 for 2006, businesses are favoring China over the US for their market place, according to Economist magazine.

During his final official day as chairman, Greenspan presided over a meeting of the Federal Reserve board which raised the prime interest rate to 4.5 percent, according USATODAY.com. The highest rate in about five years will be felt across the nation in terms of loans. The meeting of Feds left the opportunity for additional adjustments to the prime interest rate, which leaves uncertain times ahead for Greenspan's successor.

Ben Bernanke has been confirmed by the Senate to take over the reigns of the nation's central bank.  Bernanke was said to be sworn in on Feb. 1, according to Edmund L. Andrews, of The New York Times.

David Amos, Ph.D, Professor of Economics at LCCC, believes that Bernanke will combat inflation but will promote economic growth.

For the time being, interest rates will increase which affects loans for such things as homes, cars, and education and will slow down buying, according to Amos.

"To me the key thing is that some economists have felt that Greenspan has been afraid of economic growth. Growth by itself leads to inflation, an increase in the price of unchanged products," Amos said, "The new guy, Bernanke, most economists feel that he will be an inflation fighter but more pro-growth, economic growth."

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