The Fed said Greenspan’s policies and economic thinking “left a lasting mark on this institution, on the broader field of economics, and on the country”.

In a statement on Monday, the central bank said: “He brought rigorous analytical discipline to monetary policymaking and helped establish the credibility that remains one of the Federal Reserve’s most important assets.”

The Fed said his legacy lives on at the institution through the economist he mentored and inspired as chairman.

Alan Greenspan was born in New York City on 6 March 1926. His mother, who worked in a furniture store, brought him up single-handed.

Far from being a budding economist, the young Greenspan was a talented musician, who studied the clarinet at New York’s renowned Julliard School of Music.

He played in a band with Stan Getz, the legendary jazz saxophonist, before touring the country with the Henry Jerome Band. This peripatetic lifestyle gave him a valuable practical insight into the workings of US business.

And while his fellow musicians spent their evenings smoking marijuana, Alan Greenspan busied himself by swotting up on economics and doing the band’s accounts.

At the age of 19, he enrolled as an economics student at New York University, where he became an apostle of the free market, and eventually found employment as an economic consultant and, later, as a member of the board at JP Morgan.