Chairman of the Federal Reserve, Ben Bernanke
by Britney MayCom
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Following the successful Federal Reserve chairman Alan Greenspan, Ben Bernanke began the job of Chairman of the Board of Governors of the United States Federal Reserve in 2006. Governing during the credit meltdown and bank crisis of 2008, his expertise on the economic and political causes of the Great Depression will certainly be useful. He graduated from Harvard University in 1975 and received his PhD in economics from the Massachusetts Institute of Technology in 1979. His thesis was titled "Long-term commitments, dynamic optimization, and the business cycle." He believes that "Even if the economy recovers smartly for the rest of this year and the next, the ongoing slack in the economy may still lead to continuing disinflation." He is considered by many groups of economists as among the most brilliant minds in monetary policy.

Dr. Bernanke served as the Director of the Monetary Economics Program of the National Bureau of Economic Research (NBER) and as a member of the NBER's Business Cycle Dating Committee. Dr. Bernanke's work with civic and professional groups includes having served two terms as a member of the Montgomery Township (N.J.) Board of Education.

Bernanke with his younger brother and sister were one of the only Jewish families in their neighborhood. He learned Hebrew from his maternal grandfather Harold Friedman while attending a local synagogue, Ohav Shalom. His father and uncle owned and operated a drugstore that they bought from his grandfather, Jonas Bernanke. He has taught as prestigious schools Stanford Graduate School of Business, New York University, the Massachusetts Institute of Technology and Princeton University. Bernanke then took on the position of board member of the Federal Reserve during which 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." Dr. Bernanke and his wife, Anna, have two children.

Bernanke once referred to a statement made by Milton Friedman about using a "helicopter drop" of money into the economy to combat deflation. Some have even called him "helicopter Ben," although Bernanke makes an important point 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." If a "helicopter drop" is done over a large publicly held company the public will never hear about it.

The Federal Reserve recently cut interbank interest rates and increased interest rate swaps in an attempt to keep money flowing between the BoE Bank of England, the ECB European Central Bank, the Bank of Japan, and the SNB Swiss National Bank.

After the G7 summit last week Bernanke warned of continued economic trouble in a public statement. "Good afternoon. I am pleased to have once again the opportunity to address the National Association for Business Economics. My remarks today will focus on recent developments in the financial sector and the economy and on the challenges we face. As you know, financial systems in the United States and in much of the rest of the world are under extraordinary stress, particularly the credit and money markets. The losses suffered by many banks and nonbank financial firms have both constrained their ability to lend and reduced the willingness of other market participants to deal with them."

"All told, economic activity is likely to be subdued through the remainder of this year and into next year. The heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth. To support growth and reduce the downside risk, continued efforts to stabilize the financial markets are essential. The Federal Reserve will continue to use the tools at its disposal to improve market functioning and liquidity. Overall, the combination of the incoming data and recent financial developments suggest that the outlook for economic growth has worsened and that the downside risks to growth have increased. At the same time the outlook for inflation has improved somewhat though it remains uncertain. In light of these developments the Federal Reserve will need to consider whether the current stance of policy remains appropriate."

It is important to note that some pundits see the $700 billion bailout, and private sector lending, as a compromise (not expected of Bernanke) with secretary Paulson on economic matters, and not unilateral action.

We will be doing a full review of Bernanke's "Essay's on the Great Depression."