Ex-Fed Chair Ben Bernanke — Who Downplayed The Housing Bubble Threat — Wins Nobel Prize In Economic Sciences
After the win, tributes to his past “works” have been pouring–but probably not in the way he wanted.
Former Federal Reserve Chair Ben S. Bernanke and two colleagues were awarded the 2022 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for their work on banking and financial crises.
Douglas W. Diamond, an economist at the University of Chicago, and Philip H. Dybvig at Washington University in St. Louis share the prize with Bernanke.
“The work for which Ben Bernanke, Douglas Diamond and Philip Dybvig are being recognised has been crucial to subsequent research that has enhanced our understanding of banks, bank regulation, banking crises and how financial crises should be managed,” the notable award-giving body cited on its Twitter account.
The trio will also share the 10-million-kronor ($885,000) award that comes with the prize.
The prize committee has taken the unprecedented step of adding a genuine practitioner of economic policy to their pantheon by recognizing Bernanke. Many previous winners have come from academia.
“Prior to Bernanke’s study, the general perception was that the banking crisis was a consequence of a declining economy, rather than a cause of it,” the Swedish committee said. “Bernanke established that bank collapses were decisive for the recession developing into deep and prolonged depression. Bernanke demonstrated that the economy did not start to recover until the state finally implemented powerful measures to prevent additional bank panics.”
Bernanke served as Fed chair from 2006 to 2014, most notably during the global financial crisis that was partly triggered by the bursting of the housing bubble.
From 2005 to 2007, in various interviews, the economist had maintained that the subprime market is not expected to have “significant spillovers” to the rest of the economic system. He even said that “there was no housing bubble” in late 2005, a few years before the housing bubble crisis began.
His tenure was also notable for implementing a significant QE policy during the financial crisis. During his time, the Fed’s balance sheet grew from less than US$1 trillion to more than US$4 trillion as the central bank sought to stimulate growth in the battered US economy.
He was also infamous, back as Fed chair, for saying gold is not money when asked in a congressional hearing.
On Twitter, however, Bernanke is being “honored” by users who has been citing his past works–but mainly to highlight their disappointment on his win.
And it seems current Fed chair Jerome Powell is being “honored”, too.
Information for this briefing was found via Bloomberg, and sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
