Alan Greenspan and the Federal Reserve

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Greenspan and the Fed
By Motley Fool Staff

As more Americans manage their own investments and regularly follow the financial markets, it's no coincidence that formerly obscure figures like Alan Greenspan, the Chairman of the Federal Reserve, have become widely known. Greenspan, in particular, is a household name, the subject of much humor, and can cause huge market moves with a few well-chosen words. Yet, few of his predecessors have achieved such a high public profile.

In many ways, this change is fitting. Just as professional money managers are no longer the only people listening to quarterly earnings conference calls and scrutinizing SEC filings, no longer is it just Wall Street money men who follow the decisions of "the Fed." While changes in short-term interest rates -- the Fed's most closely watched tool -- shouldn't, by themselves, cause you to make changes in your portfolio, there's no question that the Fed's decisions can move markets, at least in the short-term.

As a result, investors ought to make sure they put the Fed's moves in context. With that goal in mind, we present an updated collection of articles about Alan Greenspan and the Fed. We begin with an article on the structure of the Federal Reserve, followed by a basic explanation of how its decisions affect the overall economy. Finally, we take a look at some background information on Greenspan himself.

Before you begin, however, be sure to keep the following comment from one of the greatest investors in history, Warren Buffett, in mind:

"I am not a macro guy. I don't think about it. If Alan Greenspan is whispering in one ear and Bob Rubin in the other, I don't care at all. I'm watching the businesses." (reported in BusinessWeek, 7/5/99).

Next: What is the Fed?