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