Federal Chairman Ben Bernanke has become a widely known name in recent years, perhaps for the wrong reasons. As Chairman, Bernanke has faced loads of criticism for his actions to jumpstart an economy that has been struggling for the majority of his time behind the wheel. Bernanke took office in 2006 under President Bush and has since been faced with one of the worst economies in U.S. history. But there are probably a number of things that you don’t know about Mr. Bernanke and his tenure as Fed Chairman [for more economic news and analysis subscribe to our free newsletter].
- U.S. national debt has nearly doubled since Bernanke took office: Blame this on Obama, Bush, or whoever you want. But the fact remains that U.S. debt was hovering around $8.5 trillion when Bernanke was given the nod. Our debt levels have just recently topped $16 trillion, overtaking our total GDP as a country and showing no signs of slowing anytime soon. To be fair, Bernanke has been faced with hardships not seen for nearly a century, but his monetary policies, money printing, and fiscal management have led to a very significant deficit that many feel could collapse our economy at a moment’s notice. I guess this should have been expected being that Bernanke said the following in 2002, “The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost”.
- Quantitative Easing Programs have totaled at $1.2 trillion: This is only counting the official QE 1 and QE 2 programs announced in 2008 and 2010 respectively, “Operation Twist” is not included in this figure. To give you a good reference point, the entire GDP of Australia is about $1.2 trillion. In fact, you could combine the total GDPs of Ireland, Norway, and Sweden and still not hit the total amount of money that Bernanke has injected into the US. By most accounts, QE 1 was a success but the same cannot be said for round two or any other measures that have been taken in recent months [see also Why Peter Schiff Urges a Return To a Gold Standard].
- Interest rates have not been raised in over six years: As Chairman of the Fed, Bernanke controls the interest rates of the country, and he has not raised them in quite some time. Rates jumped a few times shortly after he took office, topping out at 5.25% before cratering and holding at 0.25% for more than three years. This comes as something of a shock from a man who said this in 2010, “the financial crisis appears to be mostly behind us, and the economy seems to have stabilized and is expanding again”. Some feel that zero interest rates are actually harming the economy at this point, but it does do well for encouraging loans for small businesses and individuals.
- Bernanke has an impressive academic background: Let’s start with early education. Bernanke won the South Carolina state spelling bee at age 12. He was told he spelled a word incorrectly and left the stage, but was shortly invited back up after the judges realized that he did not make an error. Moving on to high school, Bernanke scored a near-perfect 1590 on his SAT test. From there, Bernanke earned a B.A. in economics from Harvard University in 1975. He then went on to earn a PhD in economics from MIT in 1979 and taught economics at both Stanford and Princeton [see also Why Bill Gross Thinks The Fed is Ruining The Economy].
- The Great Depression is of particular interest to the Chairman: Bernanke has a kind of infatuation with the Great Depression, as he has published numerous essays and works on the subject matter. “To understand the Great Depression is the Holy Grail of macroeconomics” Bernanke stated in one of his papers. He thought the lack of money supply in the 20s and 30s was one of the main factors contributing to such dark economic times, which may explain his love for QE, or perhaps his views on money printing in regards to a recession, as he stated ”The money supply is not changing in any significant way. What we’re doing is lowering interest rates by buying Treasury securities” just after QE 2 was announced.
Disclosure: No positions at time of writing.