The Man Who Knew: The Life and Times of Alan Greenspan — Seventeen: THE GUN-SHY CHAIRMAN

1. 1. In May 1988, George H.W. Bush warned the Fed not to tighten too much, setting the tone for his presidency's pressure on Greenspan.
2. 2. Greenspan initially prioritized financial stability over price stability after Black Monday, keeping rates low despite rising inflation.
3. 3. By August 1988, critics labeled Greenspan 'gun-shy' for not raising rates, damaging his credibility.
4. 4. Greenspan's August 1988 rate hike helped Bush win the election by cooling New England's housing boom, which undercut Dukakis's 'Massachusetts Miracle' narrative.
5. 5. After the election, Treasury Secretary Nicholas Brady and HUD Secretary Jack Kemp continued to pressure Greenspan for lower rates.
6. 6. In February 1989, Greenspan raised rates three times despite the S&L crisis, prioritizing price stability over financial stability.
7. 7. Greenspan rejected an explicit inflation target in 1989, but his actions effectively moved the Fed toward inflation targeting.
8. 8. In August 1989, White House budget director Dick Darman publicly accused the Fed of being too tight, prompting Greenspan to resist further easing.
9. 9. Greenspan opposed Manley Johnson's leak promising liquidity after the October 1989 minicrash, fearing it would create a 'Greenspan put' and encourage speculation.
10. 10. By spring 1990, Greenspan's refusal to cut rates forced Bush to abandon his 'no new taxes' pledge to fund the S&L bailout.