Ben Bernanke

Ben Bernanke

Overview
Ben Shalom Bernanke is an American economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...

, and the current Chairman
Chairman of the Federal Reserve
The Chairman of the Board of Governors of the Federal Reserve System is the head of the central banking system of the United States. Known colloquially as "Chairman of the Fed," or in market circles "Fed Chairman" or "Fed Chief"...

 of the Federal Reserve, the central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...

 of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

. During his tenure as Chairman, Bernanke has overseen the response of the Federal Reserve to late-2000s financial crisis
Late-2000s financial crisis
The late-2000s financial crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s...

.

Bernanke was a tenured professor at Princeton University
Princeton University
Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....

 and was chair of the Department of Economics there from 1996 to September 2002, when he went on public service leave. From 2002 until 2005, he served as a member of the Board of Governors of the Federal Reserve System.
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Encyclopedia
Ben Shalom Bernanke is an American economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...

, and the current Chairman
Chairman of the Federal Reserve
The Chairman of the Board of Governors of the Federal Reserve System is the head of the central banking system of the United States. Known colloquially as "Chairman of the Fed," or in market circles "Fed Chairman" or "Fed Chief"...

 of the Federal Reserve, the central bank
Central bank
A central bank, reserve bank, or monetary authority is a public institution that usually issues the currency, regulates the money supply, and controls the interest rates in a country. Central banks often also oversee the commercial banking system of their respective countries...

 of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

. During his tenure as Chairman, Bernanke has overseen the response of the Federal Reserve to late-2000s financial crisis
Late-2000s financial crisis
The late-2000s financial crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s...

.

Bernanke was a tenured professor at Princeton University
Princeton University
Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....

 and was chair of the Department of Economics there from 1996 to September 2002, when he went on public service leave. From 2002 until 2005, he served as a member of the Board of Governors of the Federal Reserve System. Here he outlined the Bernanke Doctrine
Bernanke Doctrine
The Bernanke doctrine refers to measures that the Federal Reserve can use in conducting monetary policy to combat deflation. Ben Bernanke is the Chairman of the Board of Governors of the United States Federal Reserve.-Background:...

 and first spoke of the Great Moderation, where he postulated that we are in a new era, where modern macroeconomic policy has decreased the volatility of the business cycle. He then served as Chairman of President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....

's Council of Economic Advisers before President Bush appointed him to be Chairman of the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 Federal Reserve on February 1, 2006. Bernanke was confirmed for a second term as Chairman on January 28, 2010, after being nominated by President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

.

Early and personal life


Bernanke was born in North Augusta, South Carolina
North Augusta, South Carolina
North Augusta is a city in Aiken County, South Carolina, United States, on the north bank of the Savannah River. The population was 21,348 at the 2010 census. The city is included in the Central Savannah River Area and is also part of the Augusta, Georgia metropolitan area.- History :North...

, and was raised in a ranch-style house
Ranch-style house
Ranch-style houses is a domestic architectural style originating in the United States. First built in the 1920s, the ranch style was extremely popular amongst the booming post-war middle class of the 1940s to 1970s...

 on East Jefferson Street in Dillon, South Carolina
Dillon, South Carolina
Dillon, South Carolina, the county seat of Dillon County, was established on December 22, 1888. The name of the city came from James W. Dillon, who was a key component in bringing a railroad through this area of the state, which led to development and formation of the County. Dillon’s population...

. His father Philip was a pharmacist and part-time theater manager, and his mother Edna was an elementary schoolteacher. He is the eldest of three children, having a brother and sister. His younger brother, Seth, is a lawyer in Charlotte, North Carolina, and his younger sister, Sharon, is a longtime administrator at Berklee College of Music
Berklee College of Music
Berklee College of Music, located in Boston, Massachusetts, is the largest independent college of contemporary music in the world. Known primarily as a school for jazz, rock and popular music, it also offers college-level courses in a wide range of contemporary and historic styles, including hip...

 in Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...

.

The Bernankes were one of the few Jewish families in the area, attending a local synagogue
Synagogue
A synagogue is a Jewish house of prayer. This use of the Greek term synagogue originates in the Septuagint where it sometimes translates the Hebrew word for assembly, kahal...

 called Ohav Shalom; as a child, Bernanke learned Hebrew
Hebrew language
Hebrew is a Semitic language of the Afroasiatic language family. Culturally, is it considered by Jews and other religious groups as the language of the Jewish people, though other Jewish languages had originated among diaspora Jews, and the Hebrew language is also used by non-Jewish groups, such...

 from his maternal grandfather Harold Friedman, who was a professional hazzan
Hazzan
A hazzan or chazzan is a Jewish cantor, a musician trained in the vocal arts who helps lead the congregation in songful prayer.There are many rules relating to how a cantor should lead services, but the idea of a cantor as a paid professional does not exist in classical rabbinic sources...

, shochet, and Hebrew teacher. His father and uncle co-owned and managed a drugstore that they bought from his paternal grandfather, Jonas Bernanke. Jonas was born in Boryslav
Boryslav
Boryslav is a city located on the Tysmenytsia River , in the Lviv Oblast of western Ukraine. The city is designated as a separate raion within the oblast....

, Austria-Hungary
Austria-Hungary
Austria-Hungary , more formally known as the Kingdoms and Lands Represented in the Imperial Council and the Lands of the Holy Hungarian Crown of Saint Stephen, was a constitutional monarchic union between the crowns of the Austrian Empire and the Kingdom of Hungary in...

 (today part of Ukraine), on January 23, 1891, and emigrated to the United States from Przemyśl
Przemysl
Przemyśl is a city in south-eastern Poland with 66,756 inhabitants, as of June 2009. In 1999, it became part of the Podkarpackie Voivodeship; it was previously the capital of Przemyśl Voivodeship....

, Poland (part of Austria-Hungary until 1918). He arrived at Ellis Island
Ellis Island
Ellis Island in New York Harbor was the gateway for millions of immigrants to the United States. It was the nation's busiest immigrant inspection station from 1892 until 1954. The island was greatly expanded with landfill between 1892 and 1934. Before that, the much smaller original island was the...

, aged 30, on June 30, 1921, with his wife Pauline, aged 25. On the ship's manifest, Jonas's occupation is listed as "clerk" and Pauline's as "doctor med." They moved to Dillon, from New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...

 in the 1940s. Bernanke's mother often worked in the family drugstore, having given up her job as a school teacher when her son was born, and Bernanke also assisted from time to time.

Young adult


Bernanke worked construction on a new hospital and waited tables at a restaurant at nearby South of the Border
South of the Border (attraction)
South of the Border is a rest stop and roadside attraction on Interstate 95 and US Highway 301/501 between Dillon, South Carolina and Rowland, North Carolina. It is named "south of the border" being south of the U.S. state of North Carolina...

, a roadside attraction in his hometown of Dillon, before leaving for college. To support himself throughout college, he worked during the summers at South of the Border.

Religion


As a teenager in the 1960s in the small town of Dillon, Bernanke used to help roll the Torah
Torah
Torah- A scroll containing the first five books of the BibleThe Torah , is name given by Jews to the first five books of the bible—Genesis , Exodus , Leviticus , Numbers and Deuteronomy Torah- A scroll containing the first five books of the BibleThe Torah , is name given by Jews to the first five...

 scrolls in his local synagogue
Synagogue
A synagogue is a Jewish house of prayer. This use of the Greek term synagogue originates in the Septuagint where it sometimes translates the Hebrew word for assembly, kahal...

. Although he keeps his beliefs private, his friend Mark Gertler
Mark Gertler (economist)
Mark Lionel Gertler is an American economist and Henry and Lucy Moses Professor of Economics at New York University. A specialist in business cycles and monetary policy, he has been an associate and collaborator of Federal Reserve Chairman Ben Bernanke for more than 30 years. He is among the 20...

, chairman of New York University's economics department, commented in 2005 that, "it is really embedded in who he (Bernanke) is". On the other hand, the Bernanke family was concerned that Ben would "lose his Jewish identity" if he went to Harvard. Fellow Dillon native Kenneth Manning
Kenneth Manning
Kenneth R. Manning is an American academic professor and author. He is currently the Thomas Meloy Professor of Rhetoric and of the History of Science at the Massachusetts Institute of Technology .-Early life and education:...

, an African American who would eventually become a professor of the history of sciences at MIT, helped assure the family that "there were Jews in Boston". Once at Harvard, Manning took Bernanke to a Rosh Hashanah services in Brookline his freshman year. Manning says that he found the services more meaningful than Bernanke did.

Education


Bernanke was educated at East Elementary, J. V. Martin Junior High, and Dillon High School
Dillon High School
Dillon High School is a public high school in Dillon, South Carolina. It is located on 1730 Highway 301 North, approximately five miles from border of North Carolina and South Carolina, and it is the home of the Dillon Wildcats. The school was built in 1971, with the most recent additions to the...

, where he was class valedictorian
Valedictorian
Valedictorian is an academic title conferred upon the student who delivers the closing or farewell statement at a graduation ceremony. Usually, the valedictorian is the highest ranked student among those graduating from an educational institution...

 and played saxophone
Saxophone
The saxophone is a conical-bore transposing musical instrument that is a member of the woodwind family. Saxophones are usually made of brass and played with a single-reed mouthpiece similar to that of the clarinet. The saxophone was invented by the Belgian instrument maker Adolphe Sax in 1846...

 in the marching band
Marching band
Marching band is a physical activity in which a group of instrumental musicians generally perform outdoors and incorporate some type of marching with their musical performance. Instrumentation typically includes brass, woodwinds, and percussion instruments...

. Since his high school did not offer calculus
Calculus
Calculus is a branch of mathematics focused on limits, functions, derivatives, integrals, and infinite series. This subject constitutes a major part of modern mathematics education. It has two major branches, differential calculus and integral calculus, which are related by the fundamental theorem...

, he learned it on his own. Bernanke achieved an SAT
SAT
The SAT Reasoning Test is a standardized test for college admissions in the United States. The SAT is owned, published, and developed by the College Board, a nonprofit organization in the United States. It was formerly developed, published, and scored by the Educational Testing Service which still...

 score of 1590 out of 1600. Bernanke attended Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...

, where he lived in Winthrop House
Winthrop House
John Winthrop House is one of twelve undergraduate residences at Harvard College and home to slightly under 400 students.Commonly referred to as Winthrop House, it consists of two buildings, Standish Hall and Gore Hall. Both were built in 1912 as separate freshman dormitories...

 and graduated with a Bachelor of Arts
Bachelor of Arts
A Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...

 in economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 summa cum laude in 1975. He received his Doctor of Philosophy
Doctor of Philosophy
Doctor of Philosophy, abbreviated as Ph.D., PhD, D.Phil., or DPhil , in English-speaking countries, is a postgraduate academic degree awarded by universities...

 in economics from the Massachusetts Institute of Technology
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...

 in 1979. His thesis was named Long-Term Commitments, Dynamic Optimization, and the Business Cycle; his thesis adviser was Stanley Fischer
Stanley Fischer
Stanley "Stan" Fischer is an American-Israeli economist and the current Governor of the Bank of Israel. He previously served as Chief Economist at the World Bank.-Biography:...

, and his readers included Irwin S. Bernstein, Rudiger Dornbusch, and Robert Solow
Robert Solow
Robert Merton Solow is an American economist particularly known for his work on the theory of economic growth that culminated in the exogenous growth model named after him...

 of MIT, as well as Peter Diamond
Peter Diamond
Peter Diamond was an English actor who had trained at the Royal Academy of Dramatic Art and remembered as a stuntman on television or film....

 and Dale Jorgenson of Harvard.

Adult life


Bernanke met his wife Anna, a schoolteacher, on a blind date. She was a student at Wellesley College, and he was in graduate school at MIT. The Bernankes have two children.

Academic and government career



Bernanke taught at the Stanford Graduate School of Business
Stanford Graduate School of Business
The Stanford Graduate School of Business is one of the professional schools of Stanford University, in Stanford, California and is broadly regarded as one of the best business schools in the world.The Stanford GSB offers a general management Master of Business Administration degree, the Sloan...

 from 1979 until 1985, was a visiting professor at New York University
New York University
New York University is a private, nonsectarian research university based in New York City. NYU's main campus is situated in the Greenwich Village section of Manhattan...

 and went on to become a tenure
Tenure
Tenure commonly refers to life tenure in a job and specifically to a senior academic's contractual right not to have his or her position terminated without just cause.-19th century:...

d professor
Professor
A professor is a scholarly teacher; the precise meaning of the term varies by country. Literally, professor derives from Latin as a "person who professes" being usually an expert in arts or sciences; a teacher of high rank...

 at Princeton University
Princeton University
Princeton University is a private research university located in Princeton, New Jersey, United States. The school is one of the eight universities of the Ivy League, and is one of the nine Colonial Colleges founded before the American Revolution....

 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.

Bernanke served as a member of the Board of Governors of the Federal Reserve System from 2002 to 2005. In one of his first speeches as a Governor, entitled "Deflation: Making Sure It Doesn't Happen Here", he outlined what has been referred to as the Bernanke Doctrine
Bernanke Doctrine
The Bernanke doctrine refers to measures that the Federal Reserve can use in conducting monetary policy to combat deflation. Ben Bernanke is the Chairman of the Board of Governors of the United States Federal Reserve.-Background:...

.

As a Member of the Board of Governors of the Federal Reserve System on February 20, 2004, Bernanke gave a speech in which he postulated that we are in a new era called the Great Moderation, where modern macroeconomic policy has decreased the volatility of the business cycle to the point that it should no longer be a central issue in economics.

In June 2005, Bernanke was named Chairman of President George W. Bush's Council of Economic Advisers, and resigned as Fed Governor. The appointment was widely viewed as a test run to ascertain if Bernanke could be Bush's pick to succeed Greenspan as Fed chairman the next year. He held the post until January 2006.

Chairman of the United States Federal Reserve



On February 1, 2006, President Bush appointed Bernanke to a fourteen-year term as a member of the Federal Reserve Board of Governors, and to a four-year term as Chairman. By virtue of the chairmanship, he sits on the Financial Stability Oversight Board that oversees the Troubled Asset Relief Program. He also serves as Chairman of the Federal Open Market Committee, the System's principal monetary policy making body.

His first months as chairman of the Federal Reserve System were marked by difficulties communicating with the media. An advocate of more transparent Fed policy and clearer statements than Greenspan had made, he had to back away from his initial idea of stating clearer inflation goals as such statements tended to affect the stock market. Maria Bartiromo
Maria Bartiromo
Maria Bartiromo is an American television journalist, magazine columnist and author of three books. Bartiromo is a native of New York and attended New York University. She worked at CNN for five years before joining CNBC television...

 disclosed on CNBC
CNBC
CNBC is a satellite and cable television business news channel in the U.S., owned and operated by NBCUniversal. The network and its international spinoffs cover business headlines and provide live coverage of financial markets. The combined reach of CNBC and its siblings is 390 million viewers...

 comments from their private conversation at the White House Correspondents' Association Dinner. She reported that Bernanke said investors had misinterpreted his comments as indicating that he was "dovish" on inflation. He was sharply criticized for making public statements about Fed direction, which he said was a "lapse in judgment."

During Bernanke's first term as Chairman, the Federal Reserve experienced its largest increase of power since its creation in 1913.

On August 25, 2009, President Obama announced he would nominate Bernanke to a second term as chairman of the Federal Reserve. In a short statement in Martha's Vineyard, with Bernanke standing at his side, Obama said Bernanke's background, temperament, courage and creativity helped to prevent another Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

 in 2008. When Senate Banking Committee hearings on his nomination began on December 3, 2009, several senators from both parties indicated they would not support a second term. However, Bernanke was confirmed for a second term as Chairman on January 28, 2010, by a 70–30 vote of the full Senate, historically the narrowest margin for any occupant of the position. (For the roll-call vote, see Obama confirmations, 2010.) The Senate first voted 77–23 to end debate, Bernanke winning more than the 60 approval votes needed to overcome the possibility of a filibuster
Filibuster
A filibuster is a type of parliamentary procedure. Specifically, it is the right of an individual to extend debate, allowing a lone member to delay or entirely prevent a vote on a given proposal...

. On a second vote to confirm, the 30 dissents came from 11 Democrats, 18 Republicans and one independent.

Controversies as Federal Reserve Chairman


Bernanke has been subjected to criticism concerning the late-2000s financial crisis
Late-2000s financial crisis
The late-2000s financial crisis is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s...

. According to The New York Times
The New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...

, Bernanke "has been attacked for failing to foresee the financial crisis, for bailing out Wall Street, and, most recently, for injecting an additional $600 billion into the banking system to give the slow recovery a boost." In his 2009 book End the Fed
End the Fed
End the Fed is a 2009 book by Congressman Ron Paul of Texas. The book debuted at number six on the New York Times Best Seller list and advocates the abolition of the United States Federal Reserve Bank.-Summary:...

, Congressman Ron Paul
Ron Paul
Ronald Ernest "Ron" Paul is an American physician, author and United States Congressman who is seeking to be the Republican Party candidate in the 2012 presidential election. Paul represents Texas's 14th congressional district, which covers an area south and southwest of Houston that includes...

 wrote, referring to Bernanke, "there is something fishy about the head of the world's most powerful government bureaucracy, one that is involved in a full-time counterfeiting operation to sustain monopolistic financial cartels, and the world’s most powerful central planner, who sets the price of money worldwide, proclaiming the glories of capitalism."

Merrill Lynch merger with Bank of America


In a letter to Congress from then-New York State Attorney General
New York State Attorney General
The New York State Attorney General is the chief legal officer of the State of New York. The office has been in existence in some form since 1626, under the Dutch colonial government of New York.The current Attorney General is Eric Schneiderman...

 Andrew Cuomo
Andrew Cuomo
Andrew Mark Cuomo is the 56th and current Governor of New York, having assumed office on January 1, 2011. A member of the Democratic Party, he was the 64th New York State Attorney General, and was the 11th United States Secretary of Housing and Urban Development...

 dated April 23, 2009, Bernanke was mentioned along with former Treasury Secretary Henry Paulson
Henry Paulson
Henry Merritt "Hank" Paulson, Jr. is an American banker who served as the 74th United States Secretary of the Treasury. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs.-Early life and family:...

 in allegations of fraud concerning the acquisition of Merrill Lynch
Merrill Lynch
Merrill Lynch is the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets it is the world's largest brokerage. Formerly known as Merrill Lynch & Co., Inc., prior to 2009 the firm was publicly owned and traded on the New York...

 by Bank of America
Bank of America
Bank of America Corporation, an American multinational banking and financial services corporation, is the second largest bank holding company in the United States by assets, and the fourth largest bank in the U.S. by market capitalization. The bank is headquartered in Charlotte, North Carolina...

. The letter alleged that the extent of the losses at Merrill Lynch were not disclosed to Bank of America by Bernanke and Paulson. When Bank of America CEO Ken Lewis
Ken Lewis (executive)
Kenneth D. "Ken" Lewis is the former CEO, President, and Chairman of Bank of America, the largest bank in the United States and second largest in the world. On September 30th, 2009 Bank of America confirmed that Ken Lewis would be retiring by the end of the year...

 informed Paulson that Bank of America was exiting the merger by invoking the "Materially Adverse Change" (MAC) clause, Paulson immediately called Lewis to a meeting in Washington. At the meeting, which allegedly took place on December 21, 2008, Paulson told Lewis that he and the board would be replaced if they invoked the MAC clause and additionally not to reveal the extent of the losses to shareholders. Paulson stated to Cuomo's office that he was directed by Bernanke to threaten Lewis in this manner. Congressional hearings into these allegations were conducted on June 25, 2009, with Bernanke testifying that he did not bully Ken Lewis. Under intense questioning by members of Congress, Bernanke said, "I never said anything about firing the board and the management [of Bank of America]." In further testimony, Bernanke said the Fed did nothing illegal or unethical in its efforts to convince Bank of America not to end the merger. Lewis told the panel that authorities expressed "strong views" but said he would not characterize their stance as improper.

AIG bailout


According to a January 26, 2010, column in The Huffington Post
The Huffington Post
The Huffington Post is an American news website and content-aggregating blog founded by Arianna Huffington, Kenneth Lerer, and Jonah Peretti, featuring liberal minded columnists and various news sources. The site offers coverage of politics, theology, media, business, entertainment, living, style,...

, a whistleblower
Whistleblower
A whistleblower is a person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in a government department, a public or private organization, or a company...

 has disclosed documents providing troubling details' of Bernanke's role in the AIG bailout". Republican Senator Jim Bunning
Jim Bunning
James Paul David "Jim" Bunning is an American former Major League Baseball pitcher and politician.During a 17-year baseball career, he pitched from 1955 to 1971, most notably with the Detroit Tigers and the Philadelphia Phillies. When he retired, he had the second-highest total of career...

 of Kentucky said on CNBC that he had seen documents which show Bernanke overruled recommendations from his staff in bailing out AIG. The columnist says this raises questions as to whether or not the decision to bail out AIG was necessary. Senators from both parties who support Bernanke say his actions averted worse problems and outweigh whatever responsibility he may have for the financial crisis.

Economic views



He has given several lectures at the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...

 on monetary theory
Monetary theory
Monetary economics is a branch of economics that historically prefigured and remains integrally linked to macroeconomics. Monetary economics provides a framework for analyzing money in its functions as a medium of exchange, store of value, and unit of account. It considers how money, for example...

 and policy and has written three textbooks on macroeconomics
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...

, and one on microeconomics
Microeconomics
Microeconomics is a branch of economics that studies the behavior of how the individual modern household and firms make decisions to allocate limited resources. Typically, it applies to markets where goods or services are being bought and sold...

. He was the Director of the Monetary Economics Program of the National Bureau of Economic Research
National Bureau of Economic Research
The National Bureau of Economic Research is an American private nonprofit research organization "committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community." The NBER is well known for providing start and end...

 and the editor of the American Economic Review
American Economic Review
The American Economic Review is a peer-reviewed academic journal of economics publishing seven issues annually by the American Economic Association. First published in 1911, it is considered one of the most prestigious journals in the field. The current editor-in-chief is Penny Goldberg . The...

. He is among the 50 most published economists in the world according to IDEAS/RePEc
Řepeč
Řepeč is a village and municipality in Tábor District in the South Bohemian Region of the Czech Republic.The municipality covers an area of , and has a population of 267 ....

.

Bernanke is particularly interested in the economic and political causes of the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

, on which he has published numerous academic journal articles. Before Bernanke's work, the dominant monetarist theory of the Great Depression was Milton Friedman's
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...

 view that it had been largely caused by the Federal Reserve's having reduced the money supply
Money supply
In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits .Money supply data are recorded and published, usually...

. In a speech on Milton Friedman's ninetieth birthday (November 8, 2002), Bernanke said, "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna [Schwartz, Friedman's coauthor]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again." Bernanke has cited Milton Friedman and Anna Schwartz in his decision to lower interest rates to zero. Anna Schwartz however is highly critical of Bernanke and wrote an opinion piece in the New York Times advising Obama against his reappointment to Chair of Federal Reserve. Bernanke focused less on the role of the Federal Reserve, and more on the role of private banks and financial institutions. Bernanke found that the financial disruptions of 1930–33 reduced the efficiency of the credit allocation process; and that the resulting higher cost and reduced availability of credit acted to depress aggregate demand, identifying an effect he called the financial accelerator
Financial accelerator
The financial accelerator in macroeconomics refers to the idea that adverse shocks to the economy may be amplified by worsening financial market conditions...

. When faced with a mild downturn, banks are likely to significantly cut back lending and other risky ventures. This further hurts the economy, creating a vicious cycle and potentially turning a mild recession into a major depression. Economist Brad DeLong, who had previously advocated his own theory for the Great Depression, notes that the current financial crisis has increased the pertinence of Bernanke's theory.

In 2002, following coverage of concerns about deflation in the business news, Bernanke gave a speech about the topic. In that speech, he mentioned that the government in a fiat money
Fiat money
Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.Fiat money originated in 11th...

 system owns the physical means of creating money. Control of the means of production
Means of production
Means of production refers to physical, non-human inputs used in production—the factories, machines, and tools used to produce wealth — along with both infrastructural capital and natural capital. This includes the classical factors of production minus financial capital and minus human capital...

 for money implies that the government can always avoid deflation by simply issuing more money. He said "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost."
(He referred to a statement made by Milton Friedman
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...

 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
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

 erodes the real value of the government's debt and, therefore, that it is in the interest of the government to create some inflation." For example, while Greenspan publicly supported President Clinton's deficit reduction plan and the Bush tax cuts, Bernanke, when questioned about taxation policy, said that it was none of his business, his exclusive remit being monetary policy, and said that fiscal policy and wider society related issues were what politicians were for and got elected for. But Bernanke has been identified by the Wall Street Journal and a close colleague as a "libertarian-Republican" in the mold of Alan Greenspan.

In 2005 Bernanke coined the term saving glut, the idea, which does not take into account time preference, that a worldwide oversupply of savings finances the current account deficits of the United States and keeps interest rates low.

As the recession began to deepen in 2007, many economists urged Bernanke (and the rest of the Federal Open Market Committee
Federal Open Market Committee
The Federal Open Market Committee , a committee within the Federal Reserve System, is charged under United States law with overseeing the nation's open market operations . It is the Federal Reserve committee that makes key decisions about interest rates and the growth of the United States money...

) to lower the federal funds rate
Federal funds rate
In the United States, the federal funds rate is the interest rate at which depository institutions actively trade balances held at the Federal Reserve, called federal funds, with each other, usually overnight, on an uncollateralized basis. Institutions with surplus balances in their accounts lend...

 below what it had done. For example, Larry Summers
Lawrence Summers
Lawrence Henry Summers is an American economist. He served as the 71st United States Secretary of the Treasury from 1999 to 2001 under President Bill Clinton. He was Director of the White House United States National Economic Council for President Barack Obama until November 2010.Summers is the...

, later named Director of the White House's National Economic Council under President Obama, 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
David Leonhardt
David Leonhardt is the Washington bureau chief of The New York Times. He joined The Times in 1999 and wrote the "Economics Scene" column, and for the Times Sunday Magazine. Before coming to The Times, he wrote for Business Week and The Washington Post...

 of The New York Times wrote, on January 30, 2008, that "Dr. 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."

Statements on deficit reduction and reform of Social Security / Medicare


Bernanke favors reducing the U.S. budget deficit, particularly by reforming the Social Security
Social Security (United States)
In the United States, Social Security refers to the federal Old-Age, Survivors, and Disability Insurance program.The original Social Security Act and the current version of the Act, as amended encompass several social welfare and social insurance programs...

 and Medicare
Medicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...

 entitlement programs. During a speech delivered on April 7, 2010, he warned that the U.S. must soon develop a "credible" plan to address the pending funding crisis faced by "entitlement programs such as Social Security and Medicare" or "in the longer run we will have neither financial stability nor healthy economic growth." Bernanke said that formulation of such a plan would help the economy now, even if actual implementation of the plan might have to wait until the economic outlook improves. His remarks were probably intended for the federal government's executive and legislative branches, since entitlement reform is a fiscal
Fiscal policy
In economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....

 exercise that will be accomplished by the Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....

 and the President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....

 rather than a monetary
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...

 task falling within the implementation powers of the Federal Reserve. Bernanke also pointed out that deficit reduction will necessarily consist of either raising taxes, cutting entitlement payments and other government spending
Government spending
Government spending includes all government consumption, investment but excludes transfer payments made by a state. Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is classed as government final...

, or some combination of both.

Awards and honors

  • Fellow of the Econometric Society (1997)
  • Fellow of the American Academy of Arts and Sciences
    American Academy of Arts and Sciences
    The American Academy of Arts and Sciences is an independent policy research center that conducts multidisciplinary studies of complex and emerging problems. The Academy’s elected members are leaders in the academic disciplines, the arts, business, and public affairs.James Bowdoin, John Adams, and...

     (2001)
  • Distinguished Leadership in Government Award, Columbia Business School
    Columbia Business School
    Columbia Business School is the business school of Columbia University in Manhattan, New York City. It was established in 1916 to provide business training and professional preparation for undergraduate and graduate Columbia University students...

     (2008)
  • In 2009, the South Carolina Department of Transportation
    South Carolina Department of Transportation
    The South Carolina Department of Transportation is a government agency in the US state of South Carolina. Its mission is to build and maintain roads and bridges and administer mass transit services....

     (SCDOT) Commission approved a resolution on February 21 to name Exit 190 along Interstate Highway 95
    Interstate 95 in South Carolina
    Interstate 95 is a major Interstate Highway, running along the East Coast of the United States from Florida to Maine. In South Carolina, I-95 runs approximately parallel to the Atlantic Ocean shore although about inland, from Hardeeville in the south to Dillon in the northeast.-Route...

     in Dillon County the Ben Bernanke Interchange.
  • In 2009, he was named the TIME magazine person of the year.

In media


Bernanke is portrayed by actor Paul Giamatti
Paul Giamatti
Paul Edward Valentine Giamatti is an American actor. Giamatti began his career as a supporting actor in several films produced during the 1990s including Private Parts, The Truman Show, Saving Private Ryan, The Negotiator, and Man on the Moon, before earning lead roles in several projects in the...

 in the HBO film Too Big to Fail
Too Big to Fail
Too Big to Fail is a television drama film in the United States broadcast on HBO on May 23, 2011. It is based on the non-fiction book Too Big to Fail by Andrew Ross Sorkin. The TV film was directed by Curtis Hanson...

.

See also

  • Bilderberg Group
    Bilderberg Group
    The Bilderberg Group, Bilderberg conference, or Bilderberg Club is an annual, unofficial, invitation-only conference of approximately 120 to 140 guests from North America and Western Europe, most of whom are people of influence. About one-third are from government and politics, and two-thirds from...

     2007 meeting
  • Columbia Business School#Follies Every Breath Bernanke Takes
  • 'Greenspan put
    Greenspan put
    The "Greenspan Put" refers to the monetary policy approach that Alan Greenspan, the former Chairman of the United States Federal Reserve Board, and other Fed members exercised from the late 1987 to 2000....

    '
  • 2008–2009 Keynesian resurgence
    2008–2009 Keynesian resurgence
    In 2008 and 2009, there was a resurgence of interest in Keynesian economics among policy makers in the world's industrialized economies. This has included discussions and implementation of economic policies in accordance with the recommendations made by John Maynard Keynes in response to the Great...


Further reading

  • Stewart, James B.
    James B. Stewart
    James Bennett Stewart is an American lawyer, journalist, and author.-Life and career:Stewart was born in Quincy, Illinois. A graduate of DePauw University and Harvard Law School, James B. Stewart is a member of the Bar of New York and Bloomberg Professor of Business and Economic Journalism at the...

    , "Eight Days: the battle to save the American financial system", The New Yorker
    The New Yorker
    The New Yorker is an American magazine of reportage, commentary, criticism, essays, fiction, satire, cartoons and poetry published by Condé Nast...

     magazine, September 21, 2009. Pages 58–81. Summarizing Sept 15–23, 2008 with interviews by James Stewart of Paulson, Bernanke, Geitner

External links