Posts Tagged ‘Barack Obama’

Ben Bernanke

Let me feature the new US Chairman of the Federal Reserve, Ben Bernanke.

He is a co-author on books about economics such as Macroeconomics, Principles of Macroeconomics, Principles of Microeconomics, etc. and author of the famous Essays on the Great Depression.

Ben Shalom Bernanke (pronounced /bərˈnæŋki/ bər-NANG-kee) (born December 13, 1953) is an American economist, and the current Chairman of the Board of Governors of the United States Federal Reserve. Bernanke succeeded Alan Greenspan on February 1, 2006. He was re-appointed by President Obama in 2009 as the Chairman of the Federal Reserve.

Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has written extensively. Before Bernanke’s work, the dominant monetarist theory of the Great Depression was Milton Friedman’s view that it had been largely caused by the Federal Reserve’s having reduced the money supply. 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.”^[21] Bernanke focused less on the role of the federal reserve, and more on the role of private banks and financial institutions^[22]. 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. 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.^[23] 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. ^[24] -Wikipedia

Other relates stories:

President Barack Obama nominated Ben Bernanke to a second term as chairman of the Federal Reserve System. Barring a rejection by the Senate, Mr. Bernanke will retain his title as the fourteenth Fed chairman on February 1, 2010.

Consider Mr. Bernanke’s track record against his stated goals as Fed chairman. In opposition to his predecessor, Alan Greenspan, Bernanke said that he would communicate clearly and openly with the investment community. This, he said, would remove an element of uncertainty for investors.

However, it didn’t take long for him to do an about-face on this issue. He learned that even the smallest utterance could shake markets. Today he embraces the jargon and ambiguities of his forerunner.

More troubling, Bernanke has overseen the most comprehensive lending facility ever undertaken by a central bank. During last year’s crisis, the Treasury initiated the Troubled Asset Relief Program (TARP) with the approval of Congress. The $700 billion program was soon dwarfed by a further $788 billion in loans to the banking system made by the Fed, plus another $474 billion in lending directed mostly at the purchase of Fannie Mae and Freddie Mac bonds.

The additional lending operations in excess of the TARP have thus far been veiled in secrecy. Mr. Bernanke’s calls for increased transparency have been completely forgotten. Some recipients of these funds, notably Citigroup and American International Group (AIG), have admitted to accepting the Fed loans. Others have been less forthcoming.

This pattern of concealment caused Bloomberg News to formally file a federal lawsuit seeking full disclosure of these activities on November 7 of last year. On the same day his nomination for reappointment was announced, Mr. Bernanke’s Fed was ordered by a federal court to release the information regarding recipients of its lending operations in compliance with the Freedom of Information Act. -Mises.org