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The Chairman of the Federal Reserve Bank of America (Fed) from 1987 to 2006. Alan Greenspan is notable because he ushered in the idea of stimulating the economy by the injection of funds to compensate for events which wiped wealth out - such as collapse of the stock market, the 9/11 attack of the World Trade Center and the 2008 sub-prime crisis. Greenspan was an avid follower of John Maynard Keynes, an economist who lived in the 1930's and who criticised the Fed for managing the 1929 stock market crash incorrectly. At the time the Fed adopted a tight monetary policy which caused banks and other businesses to collapse making the effect of the stock market crash worse and ultimately leading to the Great Depression which lasted for ten years. Keynes suggested that the Fed should rather have pumped money into the economy to compensate for the wealth which had been wiped out in the stock market. Greenspan was appointed by President Reagan in August 1987 - just before the October 1987 crash. Greenspan immediately implemented a massive injection of funds and pursuaded the other members of the G7 to do the same. The effect was miraculous. By March of 1988, the stock market turned and began to go up - 18 months later the S&P500 index made a new all-time record high. After that Greenspan treated all economic recessions and stockmarket downturns the same way. In the 1998 dot-com crash, funds were again injected into the economy with  the same result. Other Governors of the Fed who followed Greenspan have adopted the same approach. The only problem has been that the amounts that had to be injected have been growing exponentially. In 1987 tens of billions of dollars were required. In the 90's is was hundreds of billions and in the 2008 sub-prime crisis it was trillions. In fact, in 2008 the Fed ran out of funds and had to implement quantitative easing (Q/E) which is a euphemism for printing money in order to turn the situation around. In the end, Europe, China and Japan were forced to do the same. Ultimately more than $12,5 trillion was pumped into the world economy before it gradually dragged itself out of the lethargy and fear which followed the sub-prime crisis. During the COVID-19 pandemic the Fed again reduced interest rates to almost zero and congress pumped billions of dollars into the economy. We believe that in the next major economic downturn even Q/E will be insufficient to recover the situation, mainly because the level of debt in the world and especially America has reached unsustainable levels.

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