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Ben Shalom Bernanke[2] (/bərˈnæŋki/ bər-NANG-kee; born December 13, 1953) is an American economist at the Brookings Institution[3] who served two terms as [2] (/bərˈnæŋki/ bər-NANG-kee; born December 13, 1953) is an American economist at the Brookings Institution[3] who served two terms as Chair of the Federal Reserve, the central bank of the United States, from 2006 to 2014.[4] During his tenure as chair, Bernanke oversaw the Federal Reserve's response to the late-2000s financial crisis.[4] Before becoming Federal Reserve chair, Bernanke was a tenured professor at Princeton University and chaired the department of economics there from 1996 to September 2002, when he went on public service leave.[4]

From August 5, 2002, until June 21, 2005, he was a member of the Board of Governors of the Federal Reserve System, proposed the Bernanke Doctrine, and first discussed "the Great Moderation" — the theory that traditional business cycles have declined in volatility in recent decades through structural changes that have occurred in the international economy, particularly increases in the economic stability of developing nations, diminishing the influence of macroeconomic (monetary and fiscal) policy.

Bernanke then served as chairman of President George W. Bush's Council of Economic Advisers before President Bush nominated him to succeed Alan Greenspan as chairman of the United States Federal Reserve.[5] His first term began February 1, 2006.[6] Bernanke was confirmed for a second term as chairman on January 28, 2010, after being renominated by President Barack Obama, who later referred to him as "the epitome of calm."[7] His second term ended January 31, 2014, when he was succeeded by Janet Yellen on February 3, 2014.[8]

Bernanke wrote about his time as chairman of the Federal Reserve in his 2015 book, The Courage to Act, in which he revealed that the world's economy came close to collapse in 2007 and 2008. Bernanke asserts that it was only the novel efforts of the Fed (cooperating with other agencies and agencies of foreign governments) that prevented an economic catastrophe greater than the Great Depression.[9]

Bernanke has cited Milton Friedman and Anna Schwartz in his decision to lower interest rates to zero.[65] Anna Schwartz, however, was highly critical of Bernanke and wrote an opinion piece in The New York Times advising Obama against hi

Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has published numerous academic journal articles. 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 and has on several occasions argued that one of the biggest mistakes made during the period was to raise interest rates too early.[62] 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."[63][64]

Bernanke has cited Milton Friedman and Anna Schwartz in his decision to lower interest rates to zero.[65] Anna Schwartz, however, was highly critical of Bernanke and wrote an opinion piece in The New York Times advising Obama against his reappointment as chair of the Federal Reserve.[66] Bernanke focused less on the role of the Federal Reserve and more on the role of private banks and financial institutions.[67]

Bernanke fo

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.[68] Economist Brad DeLong, who had previously advocated his own theory for the Great Depression, notes that the global financial crisis of 2008–2009 has raised the pertinence of Bernanke's theory.[69]

In 2002, following coverage of concerns about deflation in the business news, Bernanke gave a speech about the topic.[70] In that speech, he mentioned that the government in a fiat money system owns the physical means of creating money and to maintain market liquidity. Control of the money supply implies that the government can always avoid deflation by simply issuing more money. He said "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost."[70]

He referred to a statement made by Milton Friedman about using a "helicopter drop" of money into the economy to fight deflation. Bernanke's critics have since referred to him as "Helicopter Ben" or to his "helicopter printing press." In a footnote to his speech, Bernanke noted 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."[70]

For example, while Greenspan publicly supported President Clinton's deficit reduction plan and the Bush tax cuts, Bernanke, when questioned about taxation policy, said that it was none of his business, his exclusive remit being monetary policy, and said that fiscal policy and wider society related issues were what politicians were for and got elected for. But Bernanke has been identified by The Wall Street Journal and a close colleague as a "libertarian-Republican" in the mold of Alan Greenspan.[65]

In 2005 Bernanke coined the term saving glut, the idea that relatively high level of worldwide savings was holding down interest rates and financing the current account deficits of the United States. (Alternative reasons include relatively low worldwide investment coupled with low U.S. savings.)[71]

As the recession began in 2007, many economists urged Bernanke (and the rest of the Federal Open Market Committee) to lower the federal funds rate below what it had done. For example, Larry Summers, later named Director of the White House's National Economic Council under President Obama, wrote in the Financial Times on November 26, 2007—in a column in which he argued that recession was likely—that "... maintaining demand must be the over-arching macro-economic priority. That means the Federal Reserve System has to get ahead of the curve and recognize—as the market already has—that levels of the Federal Funds rate that were neutral when the financial system was working normally are quite contractionary today."[72]

David Leonhardt of The New York Times wrote, on January 30, 2008, that "Dr. Bernanke's forecasts have been too sunny over the last six months. [On] the other hand, his forecast was a lot better than Wall Street's in mid-2006. Back then, he resisted calls for further interest rate increases because he thought the economy might be weakening."[73]

In a speech at the American Economics Association conference in January 2014, Bernanke reflected on his tenure as chairman of the Federal Reserve. He expressed his hope that economic growth was building momentum and stated that he was confident that the central bank would be able to withdraw its support smoothly.[74]

In an October 2014 speech, Bernanke disclosed that he was unsuccessful in efforts to refinance his home. He suggested that lenders "may have gone a little bit too far on mortgage credit conditions".[75]

Since February 2014, Bernanke has been employed as a Disting

In an October 2014 speech, Bernanke disclosed that he was unsuccessful in efforts to refinance his home. He suggested that lenders "may have gone a little bit too far on mortgage credit conditions".[75]

Since February 2014, Bernanke has been employed as a Distinguished Fellow in Residence with the Economic Studies Program at the Brookings Institution.[76]

On April 16, 2015, it was announced publicly that Bernanke will work with Citadel, the $25 billion hedge fund founded by billionaire Kenneth C. Griffin, as a senior adviser.[77] In the same month it was revealed that Bernanke would also join Pimco as a senior advisor.[78]

In his 2015 book, 'The Courage to Act', Bernanke revealed that he was no longer a Republican, having "lost patience with Republicans' susceptibility to the know-nothing-ism of the far right. ... I view myself now as a moderate independent, and I think that's where I'll stay."[79]

Bernanke favors reducing the U.S. budget deficit, particularly by reforming the Social Security and Medicare entitlement programs. During a speech delivered on April 7, 2010, he warned that the U.S. must soon develop a "credible" plan to address the pending funding crisis faced by "entitlement programs such as Social Security and Medicare" or "in the longer run we will have neither financial stability nor healthy economic growth."[80][81] Bernanke said that formulation of such a plan would help the economy in the near term, even if actual implementation of the plan might have to wait until the economic outlook improves.[82]

His remarks were most likely intended for the federal government's executive and legislative branches,[83] since entitlement reform is a fiscal exercise that will be accomplished by the Congress and the President

His remarks were most likely intended for the federal government's executive and legislative branches,[83] since entitlement reform is a fiscal exercise that will be accomplished by the Congress and the President[84][85] rather than a monetary task falling within the implementation powers of the Federal Reserve. Bernanke also pointed out that deficit reduction will necessarily consist of either raising taxes, cutting entitlement payments and other government spending, or some combination of both.[86]