He fully understands the problem with a fiat currency. He readily admitted that the gold standard kept inflation under control, but thought it hamstrung the economy. On the Daily Show, Jon Stewart asked him if we are really a "free market," do we really need the Fed at all? Greenspan replied basically saying with the Fed we're not a free market.
I'm not sure why some of you hate Greenspan so much. He has essentially exposed the fundamental weakness of the fiat currency system: Central banks can't control inflation. Sometimes you have to tear down the system from within.