Greg Ip

Articles by The Economist’s U.S. Economics Editor

Archive for December 2005

Lessons of the ’30s: Long Study of Great Depression Has Shaped Bernanke’s Views

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Fed Nominee Learned Perils Of Deflation, Gold Standard And Pricking of Bubbles — A Grandmother’s Explanation

By Greg Ip

2660 words

7 December 2005

The Wall Street Journal



(Copyright (c) 2005, Dow Jones & Company, Inc.)

In 1983, Mark Gertler asked his friend and fellow economist Ben Bernanke why he was starting his career by studying the Great Depression. “If you want to understand geology, study earthquakes,” Mr. Bernanke replied, according to Mr. Gertler. “If you want to understand economics, study the biggest calamity to hit the U.S. and world economies.”

Mr. Bernanke’s fascination with the economic earthquake never abated. “I am a Great Depression buff, the way some people are Civil War buffs,” he wrote in 2000. “The issues raised by the Depression, and its lessons, are still relevant today.”

Mr. Bernanke’s interest in the Depression, which dates back to his childhood, is a guide to the evolution of his thinking. In particular, his groundbreaking research on how mistakes by the Federal Reserve compounded the catastrophe is likely to influence how he steers the economy once he succeeds Alan Greenspan as its chairman early next year. Read the rest of this entry »


Written by gregip

December 7, 2005 at 11:15 pm