This series of posts is about introducing to you some of the important names in our world. Not only are these people making [economic] history as we speak, they are some of the brightest and most influential minds in the world. Lets find out if they are using their powers for good or evil… :)
Also, by knowing who these people are, what the organizations are for which they work, and what they are doing you can better understand the news that you see/hear. Ultimately, as usual, more understanding will distinguish you from the average investor/human being who could be clueless both as to what is going on and how to react.
Without further ado, I present to you Ben Bernanke - Chairman of the Federal Reserve (aka the Fed)
What is the Federal Reserve/Fed?
- The Federal Reserve is the central banking system of the United States government. This means that it is both a “bank for banks” as well as the bank at which the “US Treasury” [of which Hank Paulson is the head of] is a customer.
- The couple main purposes of the Federal reserve (among many) is to address/prevent bank panics, act as the government’s bank, and promote fairness and stability in the US economy (employment, prices, interest rates, etc).
- A few ways that the Fed does it’s job is through: control of the money supply, supervising and regulating commercial banks, and adjusting the federal funds rate.
- For the Fed, the name of the game is stability and national welfare. Very “big picture”-esque
- Ben is essentially the Chairman/boss of this part of the government.
Ben has very much an academic background which includes a PhD in economics from very prestigious schools (Hardvard and MIT). He then went on to teach at Stanford and Princeton!
Ben is pretty new on the job and started in 2/1/06, replacing the former Chairman of the fed, Alan Greenspan - who’s basically been around forever and is a highly respected economist. In terms of economists, Ben is in just about the highest position you could achieve for the world’s foremost economic superpower (I hope we still are for a while longer!).
Ben Bernanke could be seen a few months ago in the headlines of most major Fed actions in the news including rate cuts (which generally serve to boost up the economy for a little bit and spur borrowing which leads to activity) and stuff to try to stave off a lot of what is happening today. Now Ben is seen mostly working with Hank Paulson on all these enormous bailout plans and such.
So is Ben doing a bad job? Well again, this is a very complicated question. You could say that Ben Bernanke is not exactly handling the situation well given that we are in the worst financial crisis this nation has [ever] seen. However, you could also argue that things could potentially be worse (if we were attacked by aliens or something…) or that Ben actually just came in and inherited a system/nation that had been suffering for a LONG time from too much greed that dug us into a deep whole, from which we could not have possibly expected ol’ Ben B to save us from single handedly. Time will tell, time…will….tell…