Bernanke's Test: Ben Bernanke, Alan Greenspan, and the Drama of the Central Banker (Google eBook)

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Agate Publishing, 2009 - Biography & Autobiography - 287 pages
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"Brings clarity to this period of financial chaos. Highly recommended." Library Journal

The crises facing the U.S. economy in 2008 have thrown a sharp spotlight on Federal Reserve chairman Ben Bernanke. Each of his moves to address worsening economic conditions have been reported and analyzed at length in the press, as he works to mitigate the effects of the sub-prime lending debacle, the spiraling rise in oil prices, and the sharp increase in food costs. Bernanke is facing a stern test as America's central banker a test created for him, in large part, by his predecessor, Alan Greenspan.

In the two decades Greenspan served as Fed chair, central bankers who formerly worked as obscure bureaucrats became geopolitical megastars with international recognition. This switch can largely be identified with Greenspan, who helped guide the U.S. to new heights of prosperity, but who also bears significant responsibility for the subprime-induced credit crisis and all the related problems plaguing the economy.

But while their visibility may have changed dramatically, the underlying role played by central bankers has changed little. As Bernanke himself put it, "Economic growth and prosperity are created primarily by what economists call 'real' factors.... But extensive practical experience as well as much formal research highlights the crucial supporting role that financial factors play in the economy...Healthy financial conditions help a modern economy realize its full potential." No one plays a bigger role in promoting those "healthy financial conditions" than central banks, especially when it comes to price stability and the soundness of the overall financial system. The central bank also has the key power to act as lender of last resort, i.e. to "create" money. But central bankers like Bernanke can also do much to growth and prosperity with policies that jeopardize the "healthy financial conditions." Deservedly, they will get the full blame for the disaster, even if sometimes others share responsibility.

The consensus on Greenspan's performance as Fed chair used to be extremely positive, but more and more it's been called into question. Now, 2008 has seen Bernanke in the eye of a storm that was created largely during Greenspan's tenure. His management of the bubble of all bubbles will be a decisive factor in whether this crisis will be limited in its impact on the real economy or whether it directly leads to a major recession. This is "Bernanke's Test."

In examining the challenge facing Bernanke, author Johan Van Overtveldt will look back over Alan Greenspan's long record as Fed chair, as well as Ben Bernanke's career as an economist prior to replacing Greenspan. Historical context will be provided by a look at other other former Fed chairmen, such as Benjamin Strong, William McChesney Martin, Arthur Burns, and especially Greenspan's predecessor, Paul Volcker.

Central banks are rather peculiar institutions in democratically ordered societies. But today, the importance of central bankers when it comes to guiding and shaping financial circumstances cannot be underestimated.

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Bernanke's Test: Ben Bernanke, Alan Greenspan, and the Drama of the Central Banker

User Review  - Not Available - Book Verdict

In this study of the Alan Greenspan and Ben Bernanke Federal Reserve eras, Overtveldt (director, VKW Metena, Belgium) provides insight into the current financial crisis. He says that Greenspan was ... Read full review

Review: Bernanke's Test: Ben Bernanke, Alan Greenspan, and the Drama of the Central Banker

User Review  - Calvin - Goodreads

A very nice and readable book about western financial crisis. This book is not overly complicated and easily understood by general audience as the author always explain the jargon he used. This is a ... Read full review

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Contents

Introduction
9
Part One The Stage Is Set The History of the Fed and the Undertakers RiskManagement Approach
19
Chapter 1 The accidental creation of a powerhouse
23
Chapter 2 Volckers inflationfighting crusade
35
Chapter 3 High praise for a controversial chairman
47
Chapter 4 The education private life and ascent of Alan Greenspan
55
Chapter 5 The principles behind the rules
71
Chapter 6 Avoiding deflationary paralysis
81
Chapter 12 A controversial governor
147
Chapter 13 The subprime crisis sets in
161
Chapter 14 A onceinageneration event
171
Chapter 15 The odd twins
183
Chapter 16 Falling like autumn leaves
193
Chapter 17 Europe collapsing
203
Chapter 18 Crisis drivers
213
Epilogue
233

Chapter 7 Regulatory refusal
89
Chapter 8 Consumption gets out of hand
95
Part Two Ben Bernanke and His Intimate Knowledge of the Great Depression
111
Chapter 9 Bernanke begins
115
Chapter 10 The bubble controversy
133
Chapter 11 A genuine free marketer
139
Acknowledgments
247
Bibliography
249
Endnotes
261
Index
279
9781932841374_textpdf
289
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About the author (2009)

Johan Van Overtveldt, PhD, is the director of the Belgium-based think tank VKW Metena, which works on a breadth of economics-related issues. Formerly editor-in-chief of the Belgian newsmagazine Trends, he has written several books in Dutch, and contributes to the Wall Street Journal Europe and other publications. He is the author of The Chicago School: How the University of Chicago Assembled the Thinkers Who Revolutionized Economics and Business.