Everything about Ben Bernanke totally explained
Ben Shalom Bernanke is an
American economist and current
Chairman of the Board of Governors of the United States Federal Reserve. He was previously Chairman of the
U.S. President's
Council of Economic Advisers (CEA), and member of the Board of Governors of the
Federal Reserve System.
On
October 24,
2005, President
George W. Bush appointed Bernanke to succeed
Alan Greenspan as Chairman of the Federal Reserve. Bernanke was sworn in on
February 1,
2006 after the
Senate's confirmation by a
voice vote on
January 31,
2006.
Early life
Bernanke was born
December 13,
1953, in
Augusta, Georgia, but grew up in
Dillon, South Carolina. He is the eldest of three children, having a younger brother and sister. His younger brother, Seth, is currently a lawyer in Charlotte, NC, and his younger sister, Sharon, is a prior student and longtime administrator at Berklee School of Music in Boston. His father Philip was a pharmacist and part-time theater manager, and his mother Edna was originally a schoolteacher. They were one of the few
Jewish families in the area, attending a local
synagogue called Ohav Shalom; as a child, Bernanke learned
Hebrew from his maternal grandfather Harold Friedman, who was a professional
Torah reader and Hebrew teacher. His father and uncle co-owned and managed a drugstore that they'd bought from his paternal grandfather, Jonas Bernanke, who had immigrated to the United States from
Austria after
World War I and moved to Dillon from
New York in the 1940s.
He was educated at East Elementary, J.V. Martin Junior High, and Dillon High School, where he was a high-achieving pupil. He taught himself
calculus, edited the school newspaper, was class
valedictorian and achieved the highest
SAT score in the state that year — 1590 out of 1600. He was also the All-State
saxophonist, playing in the school's marching band.
During the summer, Bernanke attended
Camp Ramah located in New England.
Career
He spent his undergraduate years at Harvard and graduated with a B.A. in
economics in 1975. Throughout college, he worked as a waiter to support himself during the summer at
South of the Border, a roadside attraction in his hometown of Dillon. He received a
PhD in economics from the
Massachusetts Institute of Technology in 1979. His thesis was named "Long-term commitments, dynamic optimization, and the business cycle" and his thesis adviser was
Stanley Fischer. He taught at the
Stanford Graduate School of Business from 1979 until 1985, was a visiting professor at
New York University and went on to become a tenured
professor at
Princeton University in the Department of Economics. He chaired that department from 1996 until September 2002, when he went on public service leave. He resigned his position at Princeton July 1, 2005. Mr. Bernanke was a member of the
Board of Governors of the Federal Reserve System from 2002 to 2005. On February 1, 2006, he was appointed as a member of the Board for a fourteen-year term and to a four-year term as Chairman.
Economic views
He has given several lectures at the
London School of Economics on
monetary theory and policy and has written three textbooks on
macroeconomics, and one on
microeconomics. He was the Director of the Monetary Economics Program of the
National Bureau of Economic Research and the editor of the
American Economic Review. He is among the
50 best economists
in the world according to
IDEAS/RePEc.
Bernanke is particularly interested in the economic and political causes of the
Great Depression, on which he's written extensively. On
Milton Friedman's ninetieth birthday, November 8, 2002, he stated: "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I'd like to say to Milton and
Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
In 2002, when the word "
deflation" began appearing in the business news, Bernanke gave a speech about deflation. In that speech, he mentioned that the government in a
fiat money system owns the physical means of creating money. Control of the
means of production for money implies that the government can always avoid deflation by simply issuing more money. (He referred to a statement made by
Milton Friedman about using a "
helicopter drop" of money into the economy to fight deflation.) Bernanke's critics have since referred to him as "Helicopter Ben" or to his "helicopter printing press". In a footnote to his speech, Bernanke noted that "people know that
inflation erodes the real value of the government's debt and, therefore, that it's in the interest of the government to create some inflation."
Maria Bartiromo disclosed on
CNBC their private conversation on Fed policy (in which Bernanke said investors had misinterpreted his comments as indicating that he was "dovish" on inflation), and he was criticized for making public statements about Fed direction. Presidential Candidate and Texas Representative
Ron Paul, a member of the
House Banking Committee - who takes the view that the Federal Reserve System should be abolished and the economy should revert to 'Hard Assets' - has criticized Bernanke for "continually lowering interest rates," which he avers to have caused drastic
inflation and growth of the money supply, leading to what Paul refers to as the "inflation tax."
However, many professional economists argued that
failure to have lowered the Fed's target rate would have contributed far more significantly to
recession, and urged Bernanke (and the rest of the
Federal Open Market Committee) to lower the rate beyond what it had done. For example,
Lawrence H. Summers, the Charles Eliot Norton Professor of Economics at
Harvard and former Treasury Secretary, wrote in the
Financial Times on November 26, 2007 - in a column in which he argued that recession was likely - that "....maintaining demand must be the over-arching macro-economic priority. That means the Federal Reserve System has to get ahead of the curve and recognize - as the market already has - that levels of the Federal Funds rate that were neutral when the financial system was working normally are quite contractionary today."
David Leonhardt of the New York Times wrote, on January 30, 2008, that "Mr. Bernanke’s forecasts have been too sunny over the last six months. [On] the other hand, his forecast was a lot better than Wall Street’s in mid-2006. Back then, he resisted calls for further interest rate increases because he thought the economy might be weakening. He was dead-on right about that — and the situation would be even worse now if he'd listened to his critics then." Bernanke has since made several interest rate cuts in an effort to stabilize a shaky U.S. economy.
On March 16, 2008,
JP Morgan Chase announced its intention to acquire Wall Street investment bank
Bear Stearns Inc. The proposed purchase is controversial, due to the unprecedented involvement of Bernanke's Federal Reserve System. JP Morgan Chase agreed to pay 236 million dollars, but shortly after the deal was announced, the Federal Reserve System confirmed that in a complex package of debt securitization agreements, they were underwriting the deal for around 30 billion dollars.
Awards and fellowships
Bibliography
Trivia
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