August 11, 1987
The President. Today it's my pleasure to welcome Alan Greenspan back to official service to his country. I say official service because even in private life, Alan Greenspan has again and again devoted his time and talents to public service: Chairman of President Ford's Council of Economic Advisors; member of three Presidential commissions, including the Greenspan commission; frequent witness before congressional committees; guest lecturer at New York University; member of the board of overseers of the Hoover Institution -- and the list goes on and on.
Now, in becoming Chairman of the Federal Reserve Board, Alan is making perhaps the most dramatic personal sacrifice of his career, taking his name down from the door of Townsend-Greenspan, the firm he guided as president and chairman for nearly 30 years. Alan, I suppose it would have been only natural for you to have had some second thoughts as you packed up your boxes last week. [Laughter] But knowing you, I don't think you did. No, knowing you, I have a feeling that your thoughts had already turned to the great role in American life that you take up today.
Since its creation in 1913, the Federal Reserve System, with its Board of Governors, has become one of the central institutions of our government. Charged with maintaining the soundness of the banking system, the Fed helps to make possible the many millions of financial transactions that take place in America every day, from the purchase of stocks and bonds on Wall Street to the purchase of groceries onMain Street
But perhaps the Fed is best known for its conduct of monetary policy -- managing the rate of growth in the supply of money. How the Fed performs this job directly affects vital economic factors: inflation, interest rates, the overall rate of economic expansion itself. Under the chairmanship of Paul Volcker, the Fed has used its monetary policy to overcome the rampant inflation that had grown up during the late 1970's. "What we're aiming for,'' Chairman Volcker once said, "is a situation in which people can proceed about their business without worrying about what prices are going to do.'' And once this situation had been achieved, Chairman Volcker argued, confidence in the economy would return and economic growth would once again begin to take place. "With budgetary and monetary discipline,'' Chairman Volcker added, "the process could be sustained for years.''
Well, as we all know, economic growth has taken place, and it has been sustained. The economic expansion is now just 2 months short of becoming the longest peacetime economic expansion in American history. For some 5 years now, inflation has stayed well below the rates of the late 1970's, with interest rates coming down sharply as well. We've seen a burst of new business formations, a virtual riot of new technologies, and the creation of over 13\1/2\ million new jobs.
And I know that Governor Martha Seger, who has done some briefings for us here at the White House, reported after consultations with foreign bankers and businessmen during her recent European trip that today confidence in the American economy is firmly established abroad, and this represents a source of stability for the entire world economy. I want to express my gratitude to Paul Volcker for the part he played in these accomplishments. And I want to restate my confidence in Alan Greenspan to carry these accomplishments still further, all the while maintaining the Fed's traditional independence.
Here in our own country, Chairman Greenspan will bring all his skill to bear upon the task of promoting our continued economic growth while keeping inflation low. And this is a point that's important to note: Today, keeping down inflation and sustaining economic growth is not an either-or proposition. Today, low inflation and economic growth can and must go hand in hand.
Abroad, Chairman Greenspan will have to work closely with the heads of foreign central banks. With the entire globe becoming a single and highly competitive marketplace, Chairman Greenspan will play an important role in seeking solutions to the problems of developing countries and the massive debt some of them have accumulated. He'll work to ensure an open and fair trading system among all nations. And he will be deeply involved in the restructuring and modernization of the American banking system to keep our own capital markets competitive with others around the world.
These past 6\1/2\ years -- 6\1/2\ years of sound policies in the public sector and technological breakthroughs in the private -- have produced such a dramatic change in America, perhaps most remarkably among our young people. In the words of author George Gilder: "The future looks more open and promising to young Americans than it did before, for the simple reason that it is more open and promising. There's been a convergence of policy and technology that has changed the spirit of America.''
Well, Alan, I guess that's the fundamental reason why I'm so happy that when I asked you to become Chairman of the Federal Reserve Board, you said yes. You're an economist's economist, one of the most widely respected men in your field. But you know that economics is more than numbers, that there are crucial intangibles, as well -- intangibles like hope, a willingness to work, and, yes, faith in the future of this great and good land.
And now, the Vice President will swear Alan Greenspan in as the 13th Chairman of the Federal Reserve Board.
[At this point, Chairman Greenspan was sworn in.]
Chairman Greenspan. Mr. President, Mr. Vice President, and everyone out there, all my friends: Little more than 2 months ago, in the White House press room down the hall, the President announced that he was nominating me to replace Paul Volcker. At that time, I indicated to the President, and today I repeat, how much I appreciate his confidence in me to act as a replacement for Paul, whose career at the Fed has been one with few parallels in the history of this nation's public service. Since the nomination, I've received innumerable best wishes from friends, new and old, from all over the world. I'm particularly saddened, however, that Dr. Arthur F. Burns, former Council of Economics and Federal Reserve Board Chairman and my mentor for 35 years, through graduate school and thereafter, is not with us today.
I would particularly like to thank the staff of the Federal Reserve, who, along with Paul, have been exceptionally gracious with their time and efforts to bring me up to speed for this extraordinary challenge. I also wish to thank the Senate Banking Committee and the Senate as a whole, who confirmed my nomination. Perhaps I should also thank in advance the creators of all those events that will make the next 4 years easygoing: inflation which always stays put, the stock market which is always a bull, a dollar which is always stable, interest rates which stay low, and employment which stays high. But most assuredly, I would be thankful to those who have the capability of repealing the laws of arithmetic, which would make all of the foregoing possible. [Laughter]
Thank you very much.
The President. Congratulations, Alan Greenspan. And I know that your faith in America will strengthen our own. And now, I believe there are probably some refreshments down in the State Dining Room, and the meeting can get social.
Note: The President spoke at 3:19 p.m. in the East Room at the White House.