Ben Bernanke: System

“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

“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.”

Ben Bernanke

"Remarks by Governor Ben S. Bernanke at the Conference to Honor Milton Friedman, University of Chicago, Chicago, Illinois," http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm federalreserve.gov (2002-11-08)
Commenting to Milton Friedman's public statement that the Great Depression was caused by the Federal Reserve Bank

“We did stop the meltdown. We avoided what would have been, I think, a collapse of the global financial system. That was obviously a good thing. But one thing that I was always sure of and the Federal Reserve was always sure of was that a collapse of some of these big financial firms was going to have very serious collateral consequences. There were people arguing even as late as September 2008, “Well, why don't you just let the firms collapse? There is a system that can take care of it: bankruptcy. Why don't you let them fail?” We never thought that was a good option. Particularly, if the whole system had collapsed, we would have had extraordinarily serious consequences.”

Ben Bernanke

Lecture 3: The Federal Reserve's Response to the Financial Crisis
The Federal Reserve and the Financial Crisis (2012)

People , Thinking

“I want to make sure you keep your eyes on the ball, that is, the two basic missions of a central bank. The first is maintaining macroeconomic stability: maintaining stable growth and keeping inflation low and stable. The principal policy tool for maintaining macroeconomic stability is monetary policy. In normal times, the Fed and other central banks use open market operations—purchases and sales of securities in markets—to move interest rates up or down, and in doing so try to create a more stable macroeconomic environment.
The second part of a central bank's mission is maintaining financial stability. Central banks are focused on trying to ensure that the financial system functions properly, and in particular, they want to prevent, if possible, and if not, to mitigate the effects of a financial crisis or a financial panic.”

Ben Bernanke

Lecture 2: The Federal Reserve after World War II
The Federal Reserve and the Financial Crisis (2012)

Time , Parting