"Bernanke Admits Fed Made Mistakes Combating Crisis 10 Years Ago"
"...Former Federal Reserve Chairman Ben Bernanke acknowledged that policy makers made two critical errors fighting the financial crisis a decade ago: They failed to see it coming with such force then underestimated how much economic damage it would cause later..."
First, if you want to be pedantic it's actually the "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel". But nobody cares about about formal names if they're unwieldy[1].
Second, the comittee based the award on academic works from the 1980s. For Bernanke, that would be mostly his AER papers [2,3,4,5]. (The AER is one of the top journals in economics and 2 or 3 publications will probably get you a tenure position at most top universities.) The full papers are paywalled, but the interested can get the unpaywalled NBER versions of them (with the same title) for free.
The scientific background of this year’s prize cites the work of the 3 economists in the 1980s.
> Specifically, Diamond and Dybvig (1983) presented a theory of maturity transformation and showed that an institution using demand deposits to finance long-term projects is the most efficient arrangement, but that, at the same time, this arrangement has an inherent vulnerability: bank runs may arise
> Diamond (1984) developed a theory of a bank’s provision of delegated monitoring services and showed that banks can ensure that projects with high (but risky) long-run returns obtain funding by monitoring borrowers on behalf of lenders.
> Bernanke (1983) showed, in particular, that the downturn became so deep and so protracted in large part because bank failures destroyed valuable banking relationships, and the resulting credit supply contraction left significant scars in the real economy.
Its the prize from the central bank of Sweden for bailing out banks with tax money and giving them clear sign they can leverage and risk as much as they want, if anything goes bad tax payers will have to pay for it.
Bernanke’s research shows that bank crises can potentially have catastrophic consequences. This insight illustrates the importance of well-functioning bank regulation, and was also the reasoning behind crucial elements of economic policy during the financial crisis of 2008–2009. At this time, Bernanke was head of the US central bank, the Federal Reserve, and was able to put knowledge from research into policy. Later, when the pandemic hit in 2020, significant measures were taken to avoid a global financial crisis. The laureates’ insights have played an important role in ensuring these latter crises did not develop into new depressions with devastating consequences for society.
The consequences of the FED money printing are just starting to show. The everything bubble this time might become much worse than the housing bubble of 2008.
You think the recession now is bigger than what we would have had in 2008, without intervention at that time? I suspect that your memory fails you as to what 2008 was like.
> The consequences of the FED money printing are just starting to show.
So having an economy in with the unemployment rate being the lowest it's been in decades is a bad thing? Would you rather have low economic growth and millions of people out of work? Would that that make you happy?
I'd rather have an economy that's "too hot" with inflation that needs to be slowed down than having people not getting a pay cheque at all. Slowing down an economy that's doing "too well" is preferable IMHO to one that's causing suffering.
The slowing down now will cause more suffering than a slow economy during covid would have been.
They are raising rates but inflation is not going down at all.
Until it does there is not just "low economic growth" but rather economic contraction and even more out of work than if they did just let economy take its natural course and correction during covid.
A slow economy during a pandemic would create so much social strife and unrest... Imagine for a second if people didn't have a job, couldn't get out of the house, didn't get any money to buy food and/or pay rent. Do you think any society would have endured 2+ years of pandemic emergency actions while going through a deep recession?
The economy are people's lives, not just numbers to be balanced. Keep that in mind, empathy goes a long way to help understand human systems.
Second, the comittee based the award on academic works from the 1980s. For Bernanke, that would be mostly his AER papers [2,3,4,5]. (The AER is one of the top journals in economics and 2 or 3 publications will probably get you a tenure position at most top universities.) The full papers are paywalled, but the interested can get the unpaywalled NBER versions of them (with the same title) for free.
[1] https://dilbert.com/strip/2015-04-02
[2] https://econpapers.repec.org/article/aeaaecrev/v_3a71_3ay_3a...
[3] https://econpapers.repec.org/article/aeaaecrev/v_3a73_3ay_3a...
[4] https://econpapers.repec.org/article/aeaaecrev/v_3a76_3ay_3a...
[5] https://econpapers.repec.org/article/aeaaecrev/v_3a78_3ay_3a...