Ben Bernanke: Economics

“It was a global depression, had many causes, the whole story requires you to look at the whole international system. But policy errors in United States, as well as abroad, did play an important role. And in particular as I said, the Federal Reserve failed in this first challenge in both parts of its mission. It did not use monetary policy aggressively to prevent deflation and the collapse in the economy, so it failed in its economic stability function. And it didn't adequately perform its function as lender of last resort allowing many bank failures and a resulting contraction in credit and also with the money supply. So, in that respect, again, the Fed did not fulfill its intended mission.”

Ben Bernanke

Lecture 1: Origins and Mission of the Federal Reserve
The Federal Reserve and the Financial Crisis (2012)

Money , Error , Failure , Parting

“Economics is a highly sophisticated field of thought that is superb at explaining to policymakers precisely why the choices they made in the past were wrong. About the future, not so much. However, careful economic analysis does have one important benefit, which is that it can help kill ideas that are completely logically inconsistent or wildly at variance with the data. This insight covers at least 90 percent of proposed economic policies.”

Ben Bernanke

The Ten Suggestions http://www.federalreserve.gov/newsevents/speech/bernanke20130602a.htm. Speech given at Baccalaureate Ceremony at Princeton University, Princeton, New Jersey, June 2, 2013.

Idea , Past , Future , Help

“There’s no denying that a collapse in stock prices today would pose serious macroeconomic challenges for the United States. Consumer spending would slow, and the U. S. economy would become less of a magnet for foreign investors. Economic growth, which in any case has recently been at unsustainable levels, would decline somewhat. History proves, however, that a smart central bank can protect the economy and the financial sector from the nastier side effects of a stock market collapse.”

Ben Bernanke

"A Crash Course for Central Bankers," http://www.foreignpolicy.com/story/cms.php?story_id=3272 Foreign Policy (September/October 2000)

History

“Obviously, based on the crisis and what happened and the effects that we're still feeling, it's now clear that maintaining financial stability is just as an important a responsibility as monetary and economic stability. And indeed, this is, you know, very much a return to the—where the Fed came from in the beginning. Remember the reason that Fed was created was to try to reduce the incidents of financial panics, so financial stability was the original goal of creation of the Fed. So now we sort of come full circle.”

Ben Bernanke

Lecture 4: The Aftermath of the Crisis
The Federal Reserve and the Financial Crisis (2012)

Feeling

“House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals, including robust growth in jobs and incomes, low mortgage rates, steady rates of household formation, and factors that limit the expansion of housing supply in some areas.”

Ben Bernanke

October 20, 2005 http://www.house.gov/jec/hearings/testimony/109/10-20-05bernanke.pdf, in testimony to Congress's Joint Economic Committee.

Strong , Past , Housing

“The economic repercussions of a stock market crash depend less on the severity of the crash itself than on the response of economic policymakers, particularly central bankers.”

Ben Bernanke

"A Crash Course for Central Bankers," Foreign Policy (September/October 2000)

Dependency