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Ben Bernanke, Fed chair 2006–2014
Chair 2006–2014· Economist or figure
Fact, law or dataA rule, statute, definition or measured number.
Fed chair from 2006 to 2014, a Great Depression scholar who led the Fed through the 2008 crisis.
See it on the Money & Finance map →How it works
A Princeton economist, Bernanke became chair in February 2006 and soon faced the worst crisis since the 1930s. Determined not to repeat the Fed's Depression-era mistakes, he cut rates to near zero, lent to banks and nonbanks alike, helped rescue Bear Stearns and AIG, and launched three rounds of quantitative easing. He also opened up the Fed, starting press conferences in 2011 and adopting a formal 2% inflation target in 2012.
Why it matters
His response wrote the modern central-bank crisis playbook of zero rates, massive bond buying and emergency lending, used again in 2020 and copied worldwide.
Legacy
FOMC transcripts, his memoir The Courage to Act (2015), and his 1983 research on how bank failures deepened the Depression, for which he shared the 2022 Nobel Prize in economics.
Debates and risks
Whether his rescues prevented a second Great Depression or bred moral hazard and inflated asset prices remains debated.
Connections (4)
▸Ben Bernanke, Fed chair 2006–2014 led the Fed through The 2008 global financial crisisFact, law or data
The connection
Bernanke used the Fed's emergency powers more broadly than any chair before him: he cut rates to near zero, lent to investment banks, money funds and the commercial paper market, helped rescue Bear Stearns and AIG, swapped dollars to foreign central banks, and launched quantitative easing to lower long-term rates.
When and why
Federal Reserve, Washington, August 2007 through 2009, working with Treasury Secretaries Henry Paulson and Timothy Geithner.
How we know
Fed lending data released in 2010 under Dodd-Frank, FOMC transcripts, and Bernanke's memoir 'The Courage to Act' (2015).
Debates and risks
Whether his actions prevented a second Depression, or bailed out the culprits and planted later asset bubbles, is still argued.
▸Ben Bernanke, Fed chair 2006–2014 won a Nobel for research on The 1929 crash and the Great DepressionFact, law or data
The connection
Bernanke's 1983 paper showed that bank failures deepened the Depression beyond the drop in money: when banks failed, their knowledge of borrowers was lost, so credit dried up even for sound firms. As Fed chair in 2008 he acted on that lesson to keep banks alive and lending.
When and why
Published in the American Economic Review, June 1983; Nobel prize in economics awarded October 2022, shared with Douglas Diamond and Philip Dybvig.
How we know
The Nobel committee's citation names his Depression analysis, and he cited the research himself when explaining 2008 policy.
Debates and risks
Whether bank failures caused the Depression or mainly amplified it, and how directly that lesson justified 2008's rescues, is debated.
▸Ben Bernanke, Fed chair 2006–2014 launched Quantitative easing (QE): buying bonds to push down ratesFact, law or data
The connection
With the fed funds rate at near zero by December 2008, Bernanke's Fed had no room left to cut. Drawing on his study of the Depression and of Japan, he pushed large purchases of mortgage bonds and Treasuries to lower long-term rates. He preferred to call it 'credit easing'.
When and why
First announced November 25, 2008, and expanded in March 2009; QE2 followed in November 2010 and QE3 in September 2012, all under Bernanke.
How we know
FOMC statements and transcripts, his January 2009 'credit easing' speech, and his memoir document the decisions.
Debates and risks
Japan tried QE first, in 2001; how much Bernanke's version improved on it, and whether his 2013 hint of slowing purchases, the 'taper tantrum', was mishandled, are debated.
▸The 'global savings glut': trade surpluses recycled into US assets was named in a 2005 speech by Ben Bernanke, Fed chair 2006–2014Fact, law or data
The connection
As a Fed governor, Bernanke used the phrase 'global saving glut' in a March 2005 lecture, arguing that excess saving in Asia and oil-exporting countries, not just US budget deficits, explained the large US current-account deficit and low long-term rates. He became Fed chair in February 2006.
When and why
Sandridge Lecture to the Virginia Association of Economists, Richmond, March 10, 2005.
How we know
The speech text is on the Fed's website; Bernanke revisited the idea in a 2011 paper with Fed co-authors.
Debates and risks
Bernanke's own later research stressed European banks' role, leaving open how much weight the Asian glut deserves.