Ben Bernanke

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Ben S. Bernanke
Ben Bernanke
Incumbent
Assumed office 
February 1, 2006
Preceded by Alan Greenspan
Born December 13, 1953 (1953-12-13) (age 54)
Augusta, Georgia
Nationality American
Spouse Edna Bernanke
Alma mater Harvard College
MIT
Profession Macroeconomist
Religion Jewish

Ben Shalom Bernanke[1][2] 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.

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[edit] Early life

Bernanke was born December 13, 1953, in Syracuse, New York, 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.[3] His father and uncle co-owned and managed a drugstore that they had 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.[4]

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.[5] He was also the All-State saxophonist, playing in the school's marching band.[6]

During the summer, Bernanke attended Camp Ramah located in New England.

[edit] 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.[7] 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.[8] 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.[9]

[edit] 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 has 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 would 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."[10][11][12]

In 2002, when the word "deflation" began appearing in the business news, Bernanke gave a speech about deflation.[13] 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 is in the interest of the government to create some inflation."[13]

He is believed to be less ideologically rigid than Alan Greenspan and has been reluctant to weigh in on political issues. 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. Indeed, in his undergraduate economics textbooks he somewhat distances himself from the overt economic liberalism of Greenspan.[citation needed]

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.[14] 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.[15] 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'[16] - has criticized Bernanke for "continually lowering interest rates," which he avers to have caused drastic inflation and unnecessary growth of the money supply, leading to what Paul refers to as the "inflation tax."[17] 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." [18]

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 had listened to his critics then." [19] Bernanke has since made several interest rate cuts in an effort to stabilize a shaky U.S. economy.

On March 16, 2008, JPMorgan 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. JPMorgan 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.

[edit] Awards and fellowships

[edit] Bibliography

  • Ben S. Bernanke (1983). "Nonmonetary effects of the financial crisis in the propagation of the Great Depression". Am Econ Rev 73 (3): 257–76. 
  • Ben Bernanke, Alan Blinder (1992). "The federal funds rate and the channels of monetary transmission". Econ Rev 82 (4): 901–921. 
  • Andrew B. Abel, Ben S. Bernanke (2001). Macroeconomics. Addison Wesley. ISBN 0-201-44133-0. 
  • Ben Bernanke (2005). Essays on the Great Depression. Princeton University Press. ISBN 0-691-11820-5. 
  • Ben Bernanke, Thomas Laubach, Frederic Mishkin, Adam Posen (2005). Inflation Targeting: Lessons from the International Experience. Princeton University Press. ISBN 0-691-08689-3. 
  • Ben S. Bernanke, Robert H. Frank (2007). Principles of Macro Economics. McGraw Hill. ISBN 978-0-07-319397-7. 

[edit] References in Popular Culture

[edit] See also

[edit] Footnotes

  1. ^ Bernanke's first name is Ben, not Benjamin; it is not an abbreviated name. (ref: "Big Ben", Slate, October 24, 2005); pronounced \ber-NAN-kee\, \bər-'nan-kē\ or \bɚ.ˈnæn.ki\)
  2. ^ Bernanke's middle name is Shalom. http://www.whitehouse.gov/news/nominations/106.html
  3. ^ USATODAY.com - New Fed chief will face an economy with issues
  4. ^ [1] Bernanke's mother often worked there as well, having given up her job as a schoolteacher when he was born, and Bernanke himself also assisted from time to time.[http://www.federalreserve.gov/boarddocs/speeches/2006/20060901/default.htm
  5. ^ Ben White (November 15, 2005). Bernanke Unwrapped. The Washington Post. Retrieved on 2008-01-15.
  6. ^ Next Fed chief: smartest ever? | csmonitor.com
  7. ^ John M. Broder (August 20, 2007). In First Crisis on the Job, Bernanke’s About-Face Is Weighed. The New York Times. Retrieved on 2008-03-15.
  8. ^ Bernanke's Ph.D. thesis. Retrieved on 2008-04-12.
  9. ^ [2]Bernanke Biography
  10. ^ FRB Speech, Bernanke - On Milton Friedman's ninetieth birthday - November 8, 2002
  11. ^ To Fill His Shoes, Mr. Bernanke, Learn to Dance
  12. ^ Inside The Federal Reserve
  13. ^ a b Speech, Bernanke -Deflation- November 21, 2002
  14. ^ Lowenstein, Roger (2008-01-20), “The Education of Ben Bernanke”, The New York Times, <http://www.nytimes.com/2008/01/20/magazine/20Ben-Bernanke-t.html> 
  15. ^ Fed Chief Calls His Remarks A Mistake
  16. ^ [3]I don’t want to go back to the gold standards there’s a better...standard.-Ron Paul July 14th, 2007 Candidates@Google 25:30
  17. ^ Paul vs. Bernanke on Value of the Dollar. ABC News (December 13, 2007). Retrieved on 2008-01-15.
  18. ^ Larry Summers in Financial Times.
  19. ^ "Bernanke's Midterm Tests" by David Leonhardt, The New York Times, Jan. 30, 2008.
  20. ^ Columbia Business School Annual Dinner. Retrieved on 2008-05-08.

[edit] References

[edit] External links

Preceded by
Alan Greenspan		 Chairman of the Federal Reserve
2006 – present		 Incumbent
Preceded by
John E. Potter		 United States order of precedence
as of 2006		 Succeeded by
James Connaughton
Preceded by
Harvey S. Rosen		 Chairman of the Council of Economic Advisers
2005-2006		 Succeeded by
Edward Lazear
v • d • e
Chairmen of the Federal Reserve
Hamlin • Harding • Crissinger • Young • Meyer • Black • Eccles • McCabe • Martin • Burns • Miller • Volcker • Greenspan • Bernanke
Seal of the United States Federal Reserve
v • d • e
Current members of the Board of Governors of the Federal Reserve System of the United States
Ben Bernanke (chairman) • Donald Kohn (vice-chairman) • Randall Kroszner • Frederic Mishkin • Kevin Warsh
Seal of the Board of Governors of the United States Federal Reserve