The many lessons of The Man Who Knew

Sebastian Mallaby ambitiously sets out to accomplish three tasks in one book. He draws a portrait of Alan Greenspan the man. He chronicles more than half a century of history and Greenspan’s corresponding career as a private analyst and public servant. He also offers a lesson for future central bankers on the importance of giving sufficient weight to financial stability, not just price stability, in setting interest rates. The Man Who Knew is an impressive achievement and an important piece of scholarship that both deserves and rewards the careful reader. The footnotes alone are worthy of their own treatment, containing not only citations to Mallaby’s extensive primary research and interviews but also a running subtext of Mallaby’s commentary on Greenspan and on much of the relevant economic literature. The reviewer is daunted, left mostly to quibble over emphasis and inference. The portrait is finely drawn, one many of us will both recognize and learn from. The chronicle is a brilliant rendering of key moments in recent economic and financial history that provides the context needed to appreciate Greenspan’s extraordinary mixed legacy. Mallaby’s lesson is an important one but his focus is more on the morality tale of Greenspan ignoring his own youthful insights and not enough on why and how central banks can actually apply Greenspan’s insights and Mallaby’s lesson. Fortunately for us, The Man Who Knew provides many more important insights than Mallaby could possibly choose to highlight. Future central bankers ignore Mallaby’s volume at their peril.