Bernanke's Test: Ben Bernanke, Alan Greenspan, and the Drama of the Central Banker (Google eBook)
"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 BankerUser Review - 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 generally successful in keeping the economy vibrant and ameliorating financial shocks but that his use of low interest rates and his opposition to financial regulation fostered the growth of the housing and credit bubble. In 2007 the bubble burst, becoming first a liquidity and then a solvency crisis that could lead not simply to a severe recession but to a depression. Overtveldt examines Bernanke's life and economic thinking, especially on the Great Depression, to show he was equipped for this crisis. Though he admits that it is too early to predict success, he praises Bernanke's early recognition of the crisis, his interest-rate cuts, the innovative ways he injected liquidity into the system, and his push for greater transparency and regulation. Overtveldt's serious examination of how we got into this mess and what the Federal Reserve can do to get us out brings clarity to this period of financial chaos. Highly recommended for all interested readers, many of whom will have liked Mark Zandi's Financial Shock.-Lawrence Maxted, Gannon Univ., Erie, PA
Review: Bernanke's Test: Ben Bernanke, Alan Greenspan, and the Drama of the Central BankerUser Review - 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 ...
Chapter 2 Volckers inflationfighting crusade
Chapter 3 High praise for a controversial chairman
Chapter 4 The education private life and ascent of Alan Greenspan
Chapter 5 The principles behind the rules
Chapter 6 Avoiding deflationary paralysis
Chapter 12 A controversial governor
Chapter 13 The subprime crisis sets in
Chapter 14 A onceinageneration event
Chapter 15 The odd twins
Chapter 16 Falling like autumn leaves
Chapter 17 Europe collapsing
Chapter 18 Crisis drivers
Chapter 7 Regulatory refusal
Chapter 8 Consumption gets out of hand
Part Two Ben Bernanke and His Intimate Knowledge of the Great Depression
Chapter 9 Bernanke begins
Chapter 10 The bubble controversy
Chapter 11 A genuine free marketer