ID DATA
Ben Shalom Bernanke
Nominee for Chairman of Federal Reserve Board
Here you will find:
A. Bernanke's Biography;
B. Reaction to his nomination; and
C. His position on economics - in his own words.
"...as close to the perfect choice as Mr. Bush could have made," according to the New York Times.
Help Wanted: Alan Greenspan retires January 31, 2006, after 18 years of service, leaving big shoes for someone to fill as leader of the Federal Reserve.
Job Requirements: The person who fills this 'hot seat' will face the concerns of a 'problematic economy' as well as price increases in energy and food.
Helpful, Not Required: Straight-talking (for everyday folk to understand), good reputation (we are tired of scandals), and someone who won't let things get any worse.
A. Bernanke's Biography
Early Life
Childhood: Although born in August, Georgia, on December 13, 1953, Ben S. Bernanke was raised in Dillon, South Carolina. His father, Philip Bernanke, was a pharmacist, and his mother, Edna, a schoolteacher.
Young adult years: Ben wed Anna Friedmann May 29, 1978, a year before finishing his Ph.D. at MIT. Anna earned a B.A. from Wellesley College, and her M.A. from Stanford University.
High achiever in school.
Good spelling: As state spelling bee champion 1965, Ben represented South Carolina at the national bee but lost after he misspelled "edelweiss."
Self-starter: Ben taught himself calculus in high school, and worked his way through college at South of the Border during summer breaks.
Home and Family
Where they are today.
Home: Ben and his wife, Anna, lived in Montgomery, New Jersey, before moving to Washington, D.C. Anna currently teaches Spanish at the National Cathedral School.
Two children: Their son, Joel A. Bernanke, was born on December 5, 1982. He is interested in computer sciences, and is now studying at Brown University in Providence, Rhode Island. Four years later their daughter, Alyssa Gale Bernanke, was born on June 21, 1986. She plans to attend St. John's College.
Get-away: The Bernanke's also enjoy a family beach house at the Grand Strand in South Carolina.
On A Personal Note.
Interests: Bernanke is said to be down-to-earth, and a Boston Red Sox fan until he moved to the D.C. arae and adopted the Washington Nationals as his hometown team.
Personality: Known as a quiet person with a quick wit, Bernanke is considered calm, rational and analytical, all good qualities for a skilled negotiator. When he speaks, others listen; he does not waste words.
Interpersonal Skills: Former colleagues say he is brainy, but could take the most complicated issues and translate them into terms everyone could understand.
He Gets Noticed.
Style: Upon joining the Fed in 2002, he learned that the dress code was rather strict for high-powered financiers. At a conference this year, he commented on the phenomenon: “Wearing uncomfortable clothes on purpose is an example of what . . . economists call ‘signalling’. You have to do it to show that you take your official responsibilities seriously. My proposal that Fed governors should signal their commitment to public service by wearing Hawaiian shirts and Bermuda shorts has so far gone unheeded.”
Sense of Humor: Bernanke's impish humour came in handy just a few months after his arrival in Washington. When Mr. Bush once mocked him for wearing a pair of tan-coloured socks with a dark suit, he responded by handing out a dozen pairs of the offending socks at a subsequent White House meeting.
Career Path
Professional endeavors.
All the Details: Bernanke maintains a website at www.princeton.edu/~bernanke, which shows his office address at the Woodrow Wilson School of Public and International Affairs at Princeton, and contains pages listing his many writings and accomplishments.
Writer: Bernanke has been published extensively on the Great Depression and a wide variety of economic issues. His work shows that he is a strong advocate of transparency at the central bank.
Publications: Ben is the author of over three dozen articles, nearly two dozen review or commentary pieces, and several scholarly books. Two of his textbooks include Readings and Cases in Macroeconomics, New York: McGraw-Hill, 1987, and Macroeconomics, Reading MA: Addison-Wesley-Longman, 1991. With Andrew Abel. 2d ed., 1994. 3d ed., 1997.
Teacher: While on staff at Princeton, Bernanke was also a visiting professor at other institutions, including the London School of Economics and MIT.
A Talented Visionary
In remarks made June 21, 2005, when welcoming Bernanke as Chairman of CEA, President Bush said, "He's a talented and visionary thinker -- I'll look forward to his advice."
Bernanke's response included, "America faces a host of economic challenges." [Webmaster Note: Amen.]
Personal Quotes
On family support:
"They've supported me through the ups and downs of public service, and I'm very grateful for that support. And I hope they'll bear with me for just a few more years."
Priorities as Head of Fed:
"If I am confirmed to his position, my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years," he said. "I'll do everything in my power, in collaboration with my Fed colleagues, to help ensure the continued prosperity and stability of the American economy."
Work Background
| 2005 Oct 24 | Nominated for Chairman, Federal Reserve Board, by President George W. Bush. Bernanke has passed three Senate confirmations on previous occasions. |
| 2005 Jun-present | Chairman, president's Council of Economic Advisers (CEA). |
| 2002 Aug-2005 Jun | Board of Governors, Federal Reserve Bank. |
| 1994-2000 | Two-term member, Board of Education, Montgomery Township, New Jersey, where he gracefully led contract negotiations between the board and the teacher's union. |
| 1996-2002 | Howard Harrison and Gabrielle Snyder Beck Professor of Economics and Public Affairs, and Chair, Economics Department, Princeton University. |
| 1994-1996 | Class of 1926 Professor of Economics and Public Affairs, Princeton University. |
| 1993 | Morgenstern Visiting Professor, Department of Economics, New York University, Fall 1993. |
| 1989-1990 | Visiting Professor, Department of Economics, M.I.T., Fall 1983, and during the 1989-90 academic year. |
| 1985-2002 | Professor, Economics and Public Affairs, Princeton University. |
| 1985-1994 | Professor of Economics and Public Affairs, Princeton University. |
| 1983-1985 | Associate Professor of Economics, Graduate School of Business, Stanford University. |
| 1983 | Visiting Professor, Department of Economics, M.I.T., Fall 1983, and during the 1989-90 academic year. |
| 1979-1983 | Assistant Professor of Economics, Graduate School of Business, Stanford University. |
| 1979 | Ph.D., economics, Massachusetts Institute of Technology (MIT) |
| 1975 | B.A., summa cum laude, economics, Harvard University. Awarded Allyn Young Prize, for best undergraduate economics thesis; John H. Williams Prize for outstanding senior in the Harvard Economics Department. |
| 1971 | Graduated, high school in Dillon, South Carolina, with a 1590 out of 1600 SAT score. |
Memberships
- Academic Advisory Panel, Federal Reserve Bank of New York (member, 1990-)
- Alfred P. Sloan Research Fellow (1983-1984)
- American Academy of Arts and Sciences (Fellow)
- Bendheim Center for Finance (Princeton) (Director, 1997-1998)
- Center for Advanced Study in the Behavioral Sciences (Fellow, eligible)
- Econometric Society (Fellow, 1997)
- Econometric Society Program Committee, ASSA meetings, New Orleans (Chairman, 3-5, 1992)
- Economics Letters (Co-editor, 1993-1996)
- Federal Reserve System Visiting Scholar - Philadelphia (1987-89), Boston (1989-90), New York (1990-91, 1994-96)
- Hoover Institution National Fellow (1982-1983)
- Journal of Business (Co-editor, 1993-)
- Journal of Financial Intermediation (Associate Editor, 1990-)
- Journal of Macroeconomics (Editorial Board, 1998-)
- Journal of Money, Credit, and Banking (Associate Editor, 1993-)
- National Bureau of Economic Research (NBER) (Research Associate)
- National Bureau of Economic Research (NBER) Macroeconomics Annual (Co-editor, 1994-)
- National Science Foundation Graduate Fellow (1975)
- Phi Beta Kappa (since 1975)
- Quarterly Journal of Economics (Associate Editor, 1985-1992)
- U.S. Census Advisory Board (1986-1989)
B. Reactions
Market Reaction
The immediate good news is that on Wall Street, stocks rallied as news leaked about Bernanke's nomination.
Individual Comments
Alan Greenspan, outgoing Federal Reserve Chairman:
"The president has made a distinguished appointment in Ben Bernanke. Ben comes with superb academic credentials and important insights into the ways our economy functions. I have no doubt that he will be a credit to the nation as chairman of the Federal Reserve Board."
Harry Reid (NV), Senate Democratic Leader:
"It will be important that Mr. Bernanke demonstrate that he is committed to guiding the economy to produce results for all Americans rather than promoting partisan policies that benefit special interests and an elite few."
James Savedoff, superintendent of Montgomery Township School District:
"What always impressed me about Ben was a couple of things. You know, a brilliant, brilliant economist, and yet at the same time, one of the most modest, soft-spoken, self-deprecating people that I've ever worked with."
Dennis Hastert (IL), House Speaker:
"If confirmed, he follows in the footsteps of the able Alan Greenspan, whose leadership has helped guide America's economic policy for 18 years now. This is an important job."
Gene M. Grossman, Princeton professor:
Grossman, who replaced Bernanke as chair of the economics department, said he never thought of Bernanke as being from one political party. He described him as a top-notch scholar and fair minded. "He's just a very levelheaded person. Everyone thought he listened well, was very balanced and not prone to pushing his own agenda."
John Kerry (D-Mass), US Senator:
"We need an independent voice, free from political influence and interference, who will speak the truth to policy-makers in Washington. At a time when the number of Americans without health insurance, gas prices and education costs are skyrocketing, and wages aren't keeping pace, it's time for some common sense."
Interviews and Articles
What Awaits Ben Bernanke
In a web-exclusive interview in the Oct 2005 issue of Foreign Policy magazine, Morgan Stanley Chief Economist, Stephen S. Roach, shares his thoughts about Bernanke, the Fed, and our economy.
About Bernanke: "He’s a very solid financial economist. We know he’s an inflation targetter at heart, but in practice that’s another thing all together, especially as the chairman of the Fed."
On reaction from the global market: "Paul Volcker was tested, Alan Greenspan was tested, and I don’t think Bernanke will be given special dispensation, especially since there are so many issues that America faces with respect to its deficits."
Grading our economy: "The consumer savings rate right now is negative 1 percent, the lowest it’s been since 1933, which was not a terrific year. There is no cushion today. The most urgent thing is for the White House to focus on boosting national savings. There are two pieces to that: bringing the deficit down and putting in place policies that will stimulate private-sector savings, especially for households."
On how to avoid disaster: After explaining why the current spending pattern is flawed, he ended by saying, "If we’re going to continue to broaden our reach as a nation—militarily, with disaster relief post-Katrina, and broadening the safety net because America’s negligence of the underclass has been exposed—and cut taxes, which is what these supply-siders want to do, we’re asking for a fiscal train wreck."
A Known Entity
He is known for his work on the transmission channels of monetary policy, particularly a 1992 paper with Alan Blinder arguing that expansion of credit was more important than the money supply. Overall, he thinks the Fed should target inflation, and the final say on debts and deficits should lie with the President and Congress.
Barry Ritholtz, chief market strategist with Maxim Group says: Bernanke is a well-known, respected economist and sees sees "no reason" why Bernanke would not be approved by the Senate. "He is a known entity that is well-respected on the academic side, in Washington and by the stock market."
Academic Background vs. Real World
Richard Yamarone, director of economic research, Argus Research Corp: Ben Bernanke has spent most of his career in the academic world, and may lack some of the "real world" experience that Greenspan was able to use as Fed chair.
Deflation vs. Inflation
Critics of Bernanke call him "Helicopter Ben:" They argue that he is too worried about deflation and too sanguine about its opposite, inflation.
C. In His Own Words
This is just a taste.
Ben Bernanke has a lot to say and has spent a lot of time writing and speaking his mind. The following excerpts and quotes are merely representative of his thoughts, ideas and opinions.
From His Writings
"Downside Danger"
Excerpts from the article, available online, in the Nov/Dec 2003 issue of Foreign Policy, published by the Carnegie Endowment for International Peace.
Importance of price stability: "If a single proposition unites central bankers these days, it is the belief that price stability—in practice, a low and stable rate of inflation—is the bedrock of sound monetary policy. Determined to avoid a repeat of the Great Inflation of the 1970s, central bankers around the world have worked hard over the last two decades to achieve price stability.
What we have to watch for: "But de facto price stability has had another effect, which is now forcing central bankers, as well as the public, to fundamentally rethink inflation. The industrialized world's central banks must today try to avoid major changes in the inflation rate in either direction. In central bank speak, we now face “symmetric” inflation risks.
Debt deflation: "Deflation can be particularly dangerous when a financial system is shaky, with household and corporate balance sheets in poor shape and banks undercapitalized and heavily burdened with bad loans. Under such conditions, deflation increases the real burden of debts—that is, it forces borrowers to repay in dollars that are more expensive than the dollars they borrowed.
America is okay for now: "Although the U.S. financial system is sound, circumstances exist under which deflation or very low inflation might still conceivably pose a significant threat to the economy.
What is the 'Goldilocks' level? "In short, inflation can be too high, but it can also be too low. So what level of inflation is just right—what, if you will, is the “Goldilocks” level? The best-case scenario is when inflation is neither so high as to impede economic efficiency and growth nor so low that the nominal short-term interest rate routinely flirts with zero.
The conquest of inflation: "...is a critical factor behind the improvement in economic performance over the last two decades. To continue to promote economic growth and stability in coming decades, monetary authorities will need to exercise the same vigilance with respect to the downside risks to inflation."
On the next Fed Reserve Chairman:
In 2000, Bernanke wrote an op-ed article, "What Happens When Greenspan is Gone?" that was published in the Wall Street Journal. He outlined his theories about life after Greenspan, including the following excerpt:
"The Fed needs an approach that consolidates the gains of the Greenspan years and ensures that those successful policies will continue -- even if future Fed chairmen are less skillful or less committed to price stability than Mr. Greenspan has been."
"A Crash Course for Central Bankers"
Excerpts from the article, available online, in the Sep/Oct 2000 issue of Foreign Policy, published by the Carnegie Endowment for International Peace.
What if Wall Street collapsed? "A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street. But what effect would it have on the broader U.S. economy? If Wall Street crashes, does Main Street follow? Not necessarily."
Policy makes the difference. "A closer look reveals that 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. After the 1929 crash, the Federal Reserve mistakenly focused its policies on preserving the gold value of the dollar rather than on stabilizing the domestic economy. By raising interest rates to protect the dollar, policymakers contributed to soaring unemployment and severe price deflation.
Past mistakes. "The U.S. central bank only compounded its mistake by failing to counter the collapse of the country’s banking system in the early 1930s; bank failures both intensified the monetary squeeze (since bank deposits were liquidated) and sparked a credit crunch that hurt consumers and small firms in particular.
A smart central bank is the answer. "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."
Essays on the Great Depression
Publisher's Review of Essays on the Great Depression, by Ben Bernanke, Princeton University Press, 2005.
[He writes] "on why the Great Depression was so devastating and lasted so long. These essays include some of the recent research on the international character of the crisis. This broad view shows us that while the Great Depression was an unparalleled disaster on a truly universal scale, some economies pulled up faster than others, and some made an opportunity out of a disaster. By comparing and contrasting the economic strategies and statistics of the world's nations as they struggled to survive economically, the fundamental lessons of macroeconomics stand out in bold relief against a background of immense human suffering. The essays in this volume present a uniquely coherent view of the economic causes and worldwide propagation of the depression."
Inflation Targeting: Lessons from the International Experience
Publisher's Review of Inflation Targeting: Lessons from the International Experience, by Ben Bernanke, Thomas Laubach, Frederic Mishkin, and Adam Posen, Princeton University Press, 2005.
[This work provides a] "ground-breaking study that will have a major impact on the debate over the right monetary strategy for the coming decades. As a unique comparative study of what central banks actually do in different countries around the world, this book will also be invaluable to anyone interested in how economic policy is made."
From His Speeches
America's Deficit
Excerts from Bernanke's April 14, 2005 speech, "The Global Saving Glut and the U.S. Current Account Deficit":
Bernanke argued that a "global saving glut," resulting from new patterns in international capital flows, was largely responsible for the American current account deficit. This was controversial among those economists who felt the trade deficit was due instead to excessive governmental spending.
The Printing Press Remarks
Excerts from Bernanke's November 21, 2002 speech, "Deflation: Making Sure 'It' Doesn't Happen Here":
"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 essentially no cost," Bernanke said in remarks to the National Economists Club in Washington in November 2002.
"By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services," he said.
During that speech, Bernanke added that "prevention of deflation remains preferable to having to cure it. If we do fall into deflation, however, we can take comfort that the logic of the printing press example must assert itself, and sufficient injections of money will ultimately always reverse a deflation."
