Ben Bernanke
Ben Bernanke was the chair of the board of governors of the U.S. Federal Reserve from 2006 to 2014. Bernanke took over the rudder from Alan Greenspan on Feb. 1, 2006, ending Greenspan's 18-year leadership at the Fed.
A former Fed lead representative, Bernanke was chair of the U.S. President's Council of Economic Advisors prior to being nominated as Greenspan's replacement in late 2005.
Early Life and Education
Conceived Benjamin Shalom Bernanke on Dec. 13, 1953, he is the child of a drug specialist and a schoolteacher and was brought up in South Carolina. A high-accomplishing student, Bernanke completed his college degree summa cum laude at Harvard University and afterward completed his Ph.D. at MIT in 1979.
He showed economics at Stanford and afterward at Princeton University, where he chaired the department until 2002 when he left his scholastic work for public service. He authoritatively left his post at Princeton in 2005.
Notable Accomplishments
Bernanke was first nominated as chair of the Fed by President George W. Bush in 2005. He had been designated to President Bush's Council of Economic Advisors prior that very year, which was widely viewed as a trial for succeeding Greenspan as chair.
In 2010, President Barack Obama nominated him briefly term as chair. He was prevailed by Janet Yellen as chair in 2014. Before serving his two terms as chair of the Federal Reserve, Bernanke was a member of the Federal Reserve's Board of Governors from 2002 to 2005.
Economic Contributions
Ben Bernanke was instrumental in animating the U.S. economy after the 2008 banking crisis that sent the economy into a downward spiral. He took an aggressive and experimental approach to reestablish confidence in the financial system.
One of the various strategies that the Fed applied to curb the global crisis was enacting a low-rate policy to settle the economy. Under the tutelage of Bernanke, the Fed cut the benchmark interest rates close to zero. By decreasing the federal funds rate, banks loan each other money at a lower cost, and thus, can offer low-interest rates on loans to consumers and businesses.
$16 trillion
The total net worth American families lost somewhere in the range of 2007 and 2009 of the Great Recession.
As conditions deteriorated, Bernanke proposed a quantitative easing program. The quantitative easing scheme included the unconventional purchase of Treasury bond securities and mortgage-backed securities (MBS) to increase the money supply in the economy. By purchasing these securities on a large scale, the Fed increased the demand for them, which prompted an increase in the prices. Since bond prices and interest rates are conversely related, interest rates fell in response to the higher prices. The lower interest rates reduced the financing costs for business investments, thus working on a business' financial position. By reinforcing operations and activities, businesses had the option to make more positions, which contributed to a reduction in the unemployment rate.
Bernake's Bail Outs
Ben Bernanke likewise assisted with curbing the effects of the quickly disintegrating economic conditions by bailing out several troubled big financial institutions. While the Fed endorsed the decision to let Lehman Brothers fail, they bailed out companies, like AIG Insurance, due to the higher risk that the bailed-out companies presented assuming they failed.
On account of AIG, Bernanke accepted that the company's colossal liability was exclusively isolated in its financial products which included many billions of dollars in derivatives speculation. In the event that the company lost out on its speculative position on these derivatives, it wouldn't have adequate funds to pay out or cover its losses. For companies like Merrill Lynch and Bear Stearns, the Federal Reserve boosted Bank of America and JPMorgan to purchase and take over the two companies by ensuring the bad loans of the troubled banks.
Distributed Works
In his 2015 book, The Courage to Act, Bernanke expounded on his experience as chair of the Federal Reserve and uncovered how close the global economy came to imploding in 2008, expressing that it would have done so had the Federal Reserve and different agencies not gone to extreme lengths. President Barack Obama has additionally stated that Bernanke's actions kept the financial crisis from becoming as terrible as it might have been. In any case, Bernanke has additionally been the subject of pundits who claim he didn't do what's necessary to predict the financial crisis.
In 2013, Bernake delivered The Federal Reserve and the Financial Crisis, a gathering of his talks about the history of the Federal Reserve and the financial crisis of 2008. It includes his experiences on the Fed's activities, decisions, and responses to occasions.
Two years later, he distributed The Courage to Act: A Memoir of a Crisis and Its Aftermath, chronicling his encounters as the chairman of the Federal Reserve Board and highlighting his methods for saving the U.S. economy from another depression.
Heritage
Despite the fact that Bernanke's actions were permanent to the recovery of the global economy, he confronted analysis for the approaches that he took to accomplish this recovery. Economists censured his pumping many billions of dollars into the economy through the bond-purchase program which possibly increased individual and corporate debt, and prompted inflation. Notwithstanding these economists, officials likewise scrutinized his extreme measures and went against his re-arrangement as Federal Reserve Chair in 2010. President Barack Obama, nonetheless, reappointed him briefly term.
As of April 2018, Ben Bernanke is as of now filling in as an economist at the Brookings Institution, a nonprofit public organization situated in Washington, DC, where he gives exhortation on fiscal and monetary policies. He likewise fills in as a senior advisor to Pimco and Citadel.
The Bottom Line
Ben Bernake, the former two-term chair of the Federal Reserve, is largely respected for carrying out strategies that saved the U.S. economy. His methods, yet fairly disputable, prompted an increase in U.S. occupations, the bailout of notable, laid out financial institutions, and a robust economy. His actions were not exempt from examination, be that as it may, as there were a large group of pundits who accepted his actions were more impeding than great. Notwithstanding differing feelings, Bernake stays in high demand as an economist and advisor and is regarded as quite possibly of the most powerful Fed chair ever.
Highlights
- Pundits contend that Bernake overwhelmed the economy with too much money, adding to inflation and increased debt.
- As Fed chair, Bernanke regulated the central bank's response to the 2008 financial crisis and the Great Recession.
- Bernanke succeeded Alan Greenspan and was supplanted by Janet Yellen.
- Ben Bernanke is a former Federal Reserve chair, serving from 2006 to 2014.
- Bernake presented several strategies, including quantitative easing, to help the U.S. economy during the 2008 recession.
FAQ
To What Economic School of Thought Does Ben Bernake Belong?
Ben Bernake has a place with the Milton Friedman and Anna Schwartz school of thought. Bernake subscribed to the principle that the Federal Reserve Board could reduce inflation and rejuvenate the economy by increasing the money supply at a similar rate as the gross national product (GNP).
What Boards Did Ben Bernake Serve on?
In the wake of venturing down as the chair of the board of governors of the U.S. Federal Reserve, Ben Bernake filled in as a member of the Montgomery Township Board of Education in New Jersey for a very long time and is currently an economist for the Brookings Institution and advisor for financial services firm Citadel.
What Did Ben Bernake Do During the Financial Crisis?
To counter the effects of the financial crisis of 2008, Bernake employed a low-rate policy — by which rates were reduced to practically nothing — and a quantitative easing plan to supply increase the money. Bernake likewise bailed out some large, failing financial institutions.
