Ben Bernanke

DEFINITION of 'Ben Bernanke'

Ben Bernanke was the chairman of the board of governors of the U.S. Federal Reserve from 2006 to 2014. Bernanke took over the helm from Alan Greenspan on February 1, 2006, ending Greenspan's 18-year leadership at the Fed. A former Fed governor, Bernanke was chairman of the U.S. President's Council of Economic Advisors prior to being nominated as Greenspan's successor in late 2005.

BREAKING DOWN 'Ben Bernanke'

Early Life

Born Ben Shalom Bernanke on December 13, 1953, he was the son of a pharmacist and a schoolteacher and was raised in the Southeastern United States. A high-achieving student, Bernanke completed his undergraduate degree summa cum laude at Harvard University, then went on to complete his Ph.D. at MIT in 1979. He taught economics at Stanford and then at Princeton University, where he chaired the department until 2002, when he left his academic work for public service. He officially left his post at Princeton in 2005.

Professional Life

Bernanke was first nominated as chairman of the Fed by President George W. Bush in 2005. He had been appointed to President Bush's Council of Economic Advisors earlier the same year, which was widely seen as a test run for succeeding Greenspan as chairman. In 2010, President Barack Obama nominated him for a second term as chairman. He was succeeded by Janet Yellen as chairman in 2014. Prior to serving his two terms as chairman of the Federal Reserve, Bernanke was a member of the Federal Reserve's Board of Governors from 2002 to 2005.

In his 2015 book, The Courage to Act, Bernanke wrote about his time as chairman of the Federal Reserve and exposed how close the global economy came to collapsing in 2008, stating that it would have done so had the Federal Reserve and other agencies not taken extreme measures. President Obama has also stated that Bernanke's actions prevented the financial crisis from becoming as bad as it could have been. However, Bernanke has also been the subject of critics who claim he didn't do enough to foresee the financial crisis.

Bernanke Doctrine

During his time as a member of the Board of Governors, the issue of deflation was rising, and Bernanke proposed a policy to combat the trend. He discussed the causes of this deflation and provided a seven-step preventive solution:

  1. Increase the money supply: The government should use its printing presses to mint more money and put it into circulation.
  2. Make sure this newly printed money goes is distributed so that liquidity is preserved
  3. Reduce interest rates
  4. Fix the yield on corporate bonds and securities
  5. Depreciate the dollar
  6. Purchase foreign currencies to effect a de facto depreciation
  7. Buy U.S. industries with newly created money
RELATED TERMS
  1. Big Ben

    An investing slang term referencing Ben Bernanke. The name Big ...
  2. Alan Greenspan

    The former chairman of the Board of Governors of the Federal ...
  3. Helicopter Drop

    A hypothetical, unconventional tool of monetary policy that involves ...
  4. The Great Moderation

    The Great Moderation is the name given to the period of decreased ...
  5. Financial Accelerator

    A financial theory that states that a small change in financial ...
  6. Credit Easing

    Policy tools used by central banks to make credit more readily ...
Related Articles
  1. Mutual Funds & ETFs

    Citadel And Bernanke, The Perfect Relationship?

    How does Bernanke's relationship with investment firms impact Wall Street and Main Street?
  2. Economics

    What are the Federal Reserve Chairman's responsibilities?

    Learn about the duties and responsibilities of the chairman of the Federal Reserve Board, including testifying before Congress and as chair of the FOMC.
  3. Economics

    Janet Yellen Vs. Alan Greenspan: Who Is The Better Fed Head?

    We examine how these two histories Fed chairpeople differ and the impact of their views and actions on the world economy.
  4. Investing

    Why Greenspan Dislikes Negative Interest Rates

    Alan Greenspan is not a fan of negative interest rates, but another former Fed chair disagrees. Who is more likely to be correct and why?
  5. Economics

    The Federal Reserve: What Is The Fed?

    The Federal Reserve was created by the U.S. Congress in 1913. Before that, the U.S. lacked any formal organization for studying and implementing monetary policy. Consequently markets were often ...
  6. Economics

    Grading Janet Yellen

    Read a review of how Fed chairwoman Janet Yellen performed in her tenure as head of the Federal Reserve, and why it is more complicated than you think.
  7. Economics

    The Federal Reserve: Conclusion

    The Fed has more power and influence on financial markets than any legislative entity. Its monetary decisions are intensely observed and often lead the way for other countries to take the same ...
  8. Economics

    The Federal Reserve: The FOMC Rate Meeting

    So far we've learned about the structure of the Federal Reserve and its duties, the Federal Open Market Committee (FOMC), the tools of monetary policy and the federal funds rate. Now we're going ...
  9. Economics

    The Federal Reserve: Introduction

    Most people are aware that there is a government body that acts as the guardian of the economy - an economic sentinel who implements policies designed to keep the country operating smoothly. ...
  10. Personal Finance

    How The Federal Reserve Was Formed

    Find out how this institution has stabilized the U.S. economy during economic downturn.
RELATED FAQS
  1. What is a Greenspan put?

    Only five months into his tenure as Federal Reserve Chairman, Alan Greenspan faced his first crisis: the October 1987 stock ... Read Answer >>
  2. How is the Federal Reserve audited?

    Learn how the Federal Reserve gets audited. Due to gridlock, the Federal Reserve has been forced to take on the role of stimulating ... Read Answer >>
  3. Who controls the Federal Reserve Bank?

    Read about the ownership and control of the Federal Reserve, the most powerful financial institution in the world and the ... Read Answer >>
  4. What is the structure of the U.S. Federal Reserve Bank?

    Wonder how the U.S. Federal Bank began and how it works today? Learn how this complex system is structured and how it works ... Read Answer >>
  5. How successful have "dove" Federal Reserve heads been in the past when it comes to ...

    Review a short history of "dovish" leaders of the Federal Reserve, who use U.S. monetary policy to reduce unemployment through ... Read Answer >>
  6. How were nominal interest rates in the economy set before the Federal Reserve?

    Learn more about how nominal interest rates are determined, how the Federal Reserve targets them, and how they acted prior ... Read Answer >>
Hot Definitions
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  2. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  3. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  5. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  6. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
Trading Center