Debra Goldman’s Consumer Republic

The cult of Alan Greenspan has been a long time in the making. Beginning with the newly appointed Federal Reserve Board chairman’s management of the stock market crash of 1987, through the recession of the early ’90s and the long high-growth, low-inflation boom that followed, Greenspan’s reputation as a steward of prosperity grew.

But it was only at the end of 1998, when Fed moves stabilized global financial markets on the verge of unraveling, that he began to seem less like a mere Fed chairman and more like the Wizard of Oz.

In 1999, he was anointed by A&E’s Biography as “the most

fascinating person of the year.” In recent months, he’s been the subject of two biographies: Justin Martin’s Greenspan: The ManBehind the Money and Bob Woodward’s more perceptive yet hagiographic Maestro, whose title speaks for itself. For hard-core devotees, there’s the wisdom, The Quotations of Chairman Greenspan, a rather counterintuitive tribute to a man whose political success rests on his ability to use many words to say as little as possible.

By the time Greenspan was reconfirmed as Fed chief in 2000, he was the object of almost weepy Congressional endorsements. His credibility with the American people leaves puny elected officials in the dust. As he paraded before the cameras with George W. Bush following their first meeting, the usually dour chairman looked bemused, as if to signal he was in on the joke of this pip-squeak deigning to endorse him.

One does wonder what radical libertarian Ayn Rand would think had she lived to see her one-time acolyte become the living symbol of the power of the state and fixture of the permanent government. George W. has brought many guys from the Ford administration back into power; Greenspan is the guy who never left. Meanwhile, this enthusiastic free marketeer is now celebrated in a parody of a Maoist tract and followed obsessively and from afar, much as Western correspondents used to cover the Kremlin.

The Federal Reserve, however, is less like the Kremlin than it used to be-and the cult of Greenspan owes much to the chairman’s policy of glasnost. Until 1994, changes in the Fed funds rate were never announced.

It was left to those following the board’s actions in the Treasury bond market to figure out where interest rates were going.

These days, as Woodward points out, the announcement at the end of the Fed’s monthly meeting is a media event anticipated like the ball drop on New Year’s Eve. The result is that the Fed, whose job in part is to manage the psychology of the economy, has become a more volatile influence on that psychology.

Greenspan’s move to make the Fed’s doings more transparent to the media has been complemented by the explosion of the media eager to give him exposure.

On CNBC, TV cameras tracking the chairman’s movements have led to the creation of the Briefcase Indicator, by which the great man’s intentions are deduced from the thickness of his satchel. His testimony before Congress gets live coverage, not to mention his speeches at every rubber-chicken luncheon he attends.

Still, as the chairman himself might say, one never really knows what the future will bring. Is it possible that Greenspan’s vast visibility and influence have reached a point of diminishing returns? Consider the stock market reaction to the Fed’s early January surprise: an interim slashing of the fund rate by a half percent. Traders on the floor of the New York Stock Exchange cheered the news like fort defenders greeting the cavalry. The Nasdaq soared 14 percent, that market’s largest percentage gain ever.

But by week’s end, both exchanges were in the red for the period. In 1998, a bold interim rate cut stabilized a teetering economy. In 2001, it merely created a bubble of optimism and a selling opportunity in a down market. It begins to look like the celebrity chairman has become the last refuge of irrational exuberance.

Chairman Greenspan has surely become one of those people

whom, if he didn’t exist, we would have to invent. Beneath our enthusiasm for the market’s Invisible Hand lies our yearning for a visible one-and it belongs to Greenspan.

He is the wise one who shepherded us through the valley of the shadow of Asian contagion, Russian default and hedge-fund collapse.

So if anyone can keep the good times rolling, the nation agrees, it is he. Unless, of course, the over-ripe cult of Alan Greenspan is itself a telling sign that the long boom’s end is nigh.