Former BoE Governor King Talks Alan Greenspan's Legacy, UK Economy

Summary

Podcast Summary: Bloomberg Talks

Episode: Former BoE Governor King Talks Alan Greenspan's Legacy, UK Economy

Date: June 23, 2026
Host: Bloomberg (Interviewer possibly Lizzie or John Micklethwaite, and Caroline)
Guest: Lord Mervyn King, Former Bank of England Governor

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Episode Overview

In this episode, Bloomberg interviews Lord Mervyn King, the former Governor of the Bank of England, to reflect on the legacy of Alan Greenspan following his passing at age 100. King shares personal insights on Greenspan’s style, achievements, and the criticisms he faced as chair of the Federal Reserve. The conversation also connects Greenspan’s legacy to contemporary issues, particularly in the UK, discussing the qualities today’s central bankers and political leaders need to navigate economic challenges.

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Key Discussion Points & Insights

1. Alan Greenspan’s Legacy and Impact

• Greenspan’s Influence:
  King describes Greenspan as "a great man" and part of an era of "three great centurions in American public life — Alan Greenspan, George Schultz, and Henry Kissinger — all of whom reached 100." (01:17)
• Personal Connections:
  King recounts seeking Greenspan’s advice before taking on his BoE role, highlighting practical guidance:

  “He gave me the best advice...which was keep the mornings free to think, read and write.” (01:44)

• Greenspan’s Methods:
  King emphasizes Greenspan’s independent thinking, deep data engagement, and direct communication with business leaders. He credits Greenspan as the first to spot the 1990s US productivity boom. (02:27-03:04)
• Crisis Management:
  King's recollection of Greenspan’s adept handling of the 1987 stock market crash and subsequent challenges is notable. (04:18)

2. Criticism and Moral Hazard

• After Office Critique:
  The host notes criticism that Greenspan’s easy money policies created moral hazard and contributed to bubbles, particularly the housing crisis. (03:04-04:18)
• King’s Defense:
  King argues such critiques are “unfair,” contending Greenspan delivered nearly two decades of stable growth and low inflation, and that banking failures post-Greenspan were due to risk-taking by banks, not central bank policy.

  “He presided...over a long period of sustained expansion and low inflation for almost 20 years. That’s a remarkable feat...” (04:18)
  He adds, “He had these deep inner convictions which enabled him to go through difficult periods and come out the other side, still pursuing the right policies.” (05:57)

3. Greenspan’s Communication Style

• The ‘Mystique’ Approach:
  King describes the Greenspan (and Volcker) era as the peak of central bank “mystique and obscurity.” Greenspan’s cryptic, often riddle-like language was part of his method—famously:

  "Senator, if I seem unduly clear to you, you must have misunderstood what I said." (07:19)

• Modern Contrast:
  King believes today’s central banking, under leaders like Fed Chair Kevin Walsh, has shifted away from mystique toward clarity—focusing on communicating what is known and embracing uncertainty about the future:

  “It’s very important to be clear about what you know and what you don’t know...What we’re going to do is to respond.” (08:11)

4. Lessons for Today’s Leaders & the UK’s Challenges

• Characteristics of Great Leadership:
  King stresses the importance for leaders—whether central bankers or prime ministers—to have “clear intellectual convictions” to navigate difficult times:

  “...the only way to tackle them in a convincing way...is to have an overarching vision of what all this adds up to.” (10:29-11:38)

• UK Political Transition and Growth:
  With the UK possibly transitioning to a Labour government under Andy Burnham, King highlights the need for coherent policy, an overarching story, and readiness to implement tough decisions.
  On the UK’s future:

  “I think that growth in the UK economy, whatever the government does, is likely to return to its pre financial crisis level of around 2% or so a year.” (12:49)

• Adjusting Public Expectations:
  He notes structural challenges, such as the UK’s low savings rate, and the necessity of policies that may be unpopular in the short run but vital for long-term prosperity:

  “The biggest issue in the UK is that we save as a country less a smaller proportion of our national income than any other major industrialized country.” (14:07)

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Notable Quotes & Memorable Moments

• On Advice from Greenspan:

  “Keep the mornings free to think, read and write.” — Lord King, recalling Greenspan’s wisdom (01:44)

• On Greenspan’s Policy Convictions:

  “What Alan brought to the Fed...was a coherence and consistency of approach to monetary policy.” (06:27)

• On Central Bank Communication:

  “Putting dots on a plot, saying where you think interest rates will be in two or three years time is foolhardy, because you don’t know.” (08:24)

• On Leadership Needs:

  “The only way you could explain and sell what you were doing was to do it in the context of a budget for the public finances as a whole.” (11:07)

• On the UK’s Growth Prospects:

  “We’ve been through a very unusual period in which interest rates have been held down to very low levels...I think we’ll get that [productivity growth] back.” (13:11)

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Timestamps for Key Segments

• [01:17] Reflections on Greenspan’s stature and personal impact
• [02:27] Lessons for today’s central bankers from Greenspan’s approach
• [04:18] Defending Greenspan’s legacy and addressing post-office criticism
• [07:19] Anecdote on Greenspan’s cryptic communication style
• [08:11] Shift in central bank transparency and communication
• [10:29] Qualities needed by UK’s political leaders (Burnham’s challenge)
• [12:49] Assessment of UK economic outlook and hard policy truths

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Episode Takeaways

• Greenspan’s era was marked by a unique combination of deep expertise, mystique, and personal conviction—qualities King sees as vital in any high-stakes leadership role.
• Criticism of Greenspan’s policies in hindsight may miss the broader context and successes of his tenure.
• Today’s economic and political leaders, particularly in times of transition (e.g., the UK’s Labour government under Burnham), need both vision and the ability to communicate hard truths to the public.
• The UK faces structural economic challenges that require difficult decisions and higher national savings to achieve long-term prosperity, echoing lessons from Greenspan’s approach to leadership and policy.

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Compiled by Bloomberg Talks Podcast Summarizer, maintaining the tone and language of the original speakers for clarity and engagement.

Transcript

[Indiana University Announcer]

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[Mervyn King]

Bloomberg Audio Studios Podcasts, Radio

[Interviewer (possibly Lizzie or John Micklethwaite)]

News Lizzie we learned of course that Alan Greenspan, the chairman of the Federal Reserve for 18 years, has died the age of 100. One of the great central bankers of our time, he steered the US through stock market crashes in 1987 and 2001 after the September 11 attack. But he faced criticism over easy monetary policy and the so called Greenspan put. Now we wanted to think about Greenspan's legacy, of course contested. Joining us now is Mervyn King who is the former bank of England governor to discuss. Lord King, thank you so much for being with us, with us, I mean how to sum up such a life, the impact of this man on the United States and abroad. But I wanted your thoughts. A contemporary in part. How do you think of Alan Greenspan?

[Mervyn King]

Well, he was a great man and I like to think that this is an end of an era because I think in American public life there have been three great centurions, Alan Greenspan, George Schultz and Henry kissinger. And all three reached and died at the age of 100. I was privileged to know them all. Alan, of course, I was closest to because we were opposite numbers for several years and I was a deputy at the bank of England when he was chairing the Fed. And I kept in touch with him and saw him quite often after he left the Federal Reserve and when I was appointed governor of the bank, I went to Washington to see Alan and ask for advice. And he gave me the best advice, I think that anyone gave me, which was keep the mornings free to think, read and write. And that was enormously helpful and important in working out how to play the role of a central bank governor.

[Interviewer (possibly Caroline)]

Lord King, thank you for joining us this morning. What, what other lessons should central bankers today take from Greenspan?

[Mervyn King]

Well, because he had an unrivaled ability to think for himself and delve into the details of data on the economy. He didn't just rely on someone putting a piece of paper in front of him saying this is the latest official statistic on the labour market or production. He would talk to business people directly and he was trying out for himself what was going on. And I think the high peak of that performance was in the 1990s when he was really the first to spot the impact of faster productivity growth in the US economy.

[Interviewer (possibly Lizzie or John Micklethwaite)]

Greenspan in office, as you say, was widely respected. I mean I remember markets hung on every word that he uttered, although cryptic as it often was. As our own editor in chief John Micklethwaite has said, the Greenspan Fed managed to avoid even one single quarter falling year on year GDP during his tenure. Even in the dot com bust, you know, there was an incredible achievement and run over that 18 year period. And yet Greenspan did fall out of favor in some senses, particularly after he left office. His policies were seen perhaps as having resulted in moral hazard in economic bubbles. Later he sort of departed just before the housing bubble burst. Now there also almost seems to be a reversal of that because he was, you know, out of office for so long and maybe a rethink about that. But, but in terms of that moment where, and those years where he was out of favor, how credible do you think that is? How do you think about that? You know, that, that, that moment, that time frame when, when his policies were criticized.

[Mervyn King]

Well, I think that would be an unfair thing to do for him. He presided, as you said, over a long period of sustained expansion and low inflation for almost 20 years. That's a remarkable feat to be able to manage. Circumstances were not difficult for part of that time though. Within two months of taking office he had to deal with the 1987 stock market crash where prices fell by around 30%, biggest crash since 1929. And he dealt with that deftly and swiftly and received praise for that. So he did have to handle some quite tricky problems I think later on. I mean my experience has been that politicians and others will always want to find someone to blame. And once Alan had left office he was an easy target for someone to blame. But the problems that arose in the banking sector were largely the decisions taken by banks themselves. And I think Alan admitted afterwards that he had assumed that banks would focus on managing the risks they were taking in their own self interest. And of course they didn't. They took wild risks which resulted in the need for them to be rescued by the Fed and by the US Treasury. Now that didn't do the banks any good. I mean it was a near death experience for many of them. And if they came through it, the people leading the banks did not come through it, they left. But Alan recognized that nevertheless the idea that somehow the state should manage and run everything is not an idea that's either carried on, it really doesn't make much sense. Alan had deep convictions that sound money and a market economy with a way to a prosperous democratic society. And what he demonstrated was that he had these deep inner convictions which enabled him to go through difficult periods and come out the other side, still pursuing the right policies. When you have a leader of an institution, whether it's a central bank or any other institution, who doesn't have these personal intellectual convictions, they get blown around, they take advice from one person, then they hit a difficult patch. So they get rid of the first advisor, look around for others, and that's a recipe for chaos and volatility in policy. What Alan brought to the Fed, which the rest of the world admired enormously, was a coherence and consistency of approach to monetary policy. And he was a figure that everyone revered. I've never forgotten going to international meetings at which the finance ministers, all politicians, would sit around with absolutely rapt attention to Alan as he Talked for about 45 minutes without stopping about what was happening in the world and dazzling them with an array of obscure statistics, Concrete production in Missouri and all kinds of numbers, they were absolutely amazed by it. They'd never seen anything like it. But of course, what he was doing was managing to grip their attention while trying to avoid being particularly clear. And he famously said in an appearance before Congress, you know, senator, if I seem unduly clear to you, you must have misunderstood what I said. Well, that was a great secret of

[Interviewer (possibly Caroline)]

his success on that point. Caroline hinted at the sometimes cryptic nature of the way he spoke, speaking deliberately in riddles perhaps, to try to keep markets guessing. Is that a model that you think the current Fed chairman, Kevin Walsh, is returning to, not putting his dot on the plot, changing the way the Fed communicates?

[Mervyn King]

No, I think there's a difference. I think that Alan, together with his predecessor, Paul Volcker, represented the peak period of mystique in central banking and obscurity. I think that's gone. I think that central banking today has moved on to a world where it's very important to be clear about what you know and what you don't know. And I think what Kevin Walsh understands is that putting dots on a plot, saying where you think interest rates will be in two or three years time is foolhardy, because you don't know where interest rates will be, even though you set them yourself. Because the world is unpredictable. The world is always changing. What's important is to say to people, this is what we do understand about the economy, but this is what we do not understand. And there are things that will happen in the future that we can't easily predict, and we're not going to try and predict the unknowable. What we're going to do is to respond. And I think clarity in communications is not served well by pretending to know what policy you're going to implement in the future. And it detracts from focusing on today's decision.

[Interviewer (possibly Lizzie or John Micklethwaite)]

Yeah, look, I think you've said a lot of very interesting things from firsthand experience about Alan Greenspan, but also things that are very relevant to today. I like, you know, you mentioned mystique and obscurity, but also it was a time of intellectual heft, wasn't it, and expertise. And this brings me to. To another point about the UK today. We are thinking about Brexit 10 years on and the political instability that we've seen in those years. You know, we're in line maybe for another Prime Minister, possibly Andy Burnham, within weeks. And so we're thinking about what that transition and what this new administration in the UK is going to look like, who Burnham may pick as Chancellor? How do you think that the Labour government under Burnham delivers on the great challenge now for Britain of growth and prosperity, Something that you say, you know, Greenspan was instrumental in helping to deliver in the us? I mean, that's a massive challenge for Britain today.

[Mervyn King]

It is. And that's why I return to the point I made earlier, which is I think Andy Burnham will need to develop and have clear intellectual convictions of his own, which he believes in, which will enable him to ride through the occasional difficult patches which he's bound to confront. And we don't know what those convictions are. They're rather vague at this stage. Well, fair enough. He's not been in office, he hasn't been asked to produce an alternative plan. But from now on, he will be asked and confronted with a whole series of very difficult questions. You know, how much would you spend on defence? What will you do about the triple lock for old age people? Are you going to start to change social care now rather than wait until the end of the Parliament? There are a whole range of difficult questions, practical questions, but I think what's very important is the only way to tackle them in a convincing way, so the public understands why difficult decisions are being taken, is to have an overarching vision of what all this adds up to. So I'll give you one concrete example. Abolishing winter fuel allowance for old age pensioners made no sense as a single individual action. The only way you could explain and sell what you were doing was to do in the context of a budget for the public finances as a whole. Where we needed to raise more money, we should contribute that and why pensioners might benefit from some other of the other measures in the budget, even if they lost from this particular one. It needs an overall story to persuade people that there are difficult decisions to be taken. But the reason for taking them is to ensure that the economy will improve so that our children and grandchildren will not be burdened by an unnecessarily high level of debt, which will raise taxes on them.

[Interviewer (possibly Caroline)]

Which helps make the case for more hope under Burnham than Starmer, because by all accounts, he is a better communicator. He's better at painting a vision. Let me ask you then, what is the best case scenario for the UK economy under a Burnham premiership when he's going to be just as fiscally squeezed as his predecessors?

[Mervyn King]

Well, I think the best case is that he is bold and takes some difficult decisions, but explains why they're being taken in the interest of future generations. And I do think that one thing that's been underestimated is that I think that growth in the UK economy, whatever the government does, is likely to return to its pre financial crisis level of around 2% or so a year. We've been through a very unusual period in which interest rates have been held down to very low levels and as a result, companies that would otherwise have gone out of business or contracted and released people and investment to more successful firms, that has been happening on a much smaller scale than would normally be the case. And that switch of people and resources from poor to good companies is always part of the underlying aggregate increase in productivity. And I think we'll get that back. So I don't think we should be pessimistic about the long run. What we need to find is a government that is prepared to put forward a comprehensive plan of difficult decisions which will not be seen as attractive to many voters, but they will understand the reason why, because it's being done in the interest of future generations. And the biggest issue in the UK is that we save as a country less a smaller proportion of our national income than any other major industrialized country. And we have to increase the national saving rate in order to switch resources to investment and to exports. And that means that we can't go on consuming at the same rate as we have. That's not a happy outcome in the short run, but it's a necessary condition of putting our country back onto a course for greater prosperity in the future.

[Interviewer (possibly Lizzie or John Micklethwaite)]

Yes, and it's really the question, I think, that has dogged a number of leaders. It's about whether voters will go for that, whether they'll stick with that kind of maybe tougher plan. Mervyn King, thank you so much for being with us. We really appreciate your time. That is the former bank of England Governor Lord King.

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