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Bernanke’s ‘Solutions’ are Destroying the Dollar

Bernanke’s “Solutions” Are the Problem

By Mark Thornton

Ben Bernanke, the man who purports to be the savior of the economy today, was actually deeply involved in creating the housing bubble, encouraging people to invest in toxic assets, and orchestrating the cover-up after the bubble collapsed. Now he is bludgeoning the economy into depression. Just like his predecessor Greenspan, his statements are replete with misleading, convoluted, and inconsistent claims, all designed to disguise the role of the Fed in the economic calamity.

Ben Bernanke went to Harvard University, where he received his undergraduate degree in economics. He then went to graduate school at the Massachusetts Institute of Technology, MIT, where he received his PhD in economics. His thesis adviser was Stanley Fischer, and his committee consisted of Fischer, Rudiger Dornbusch, and Robert Solow, a Nobel Prize winner. (He also thanked Harvard University professors Dale Jorgenson and Peter Diamond [Nobel laureate 2010] in his dissertation.) It is safe to say that he had an elite education in mainstream economics.

Bernanke has taught at Stanford University, New York University, and Princeton University, where he served as chairman of the department from 1996 to 2002. Bernanke has authored major textbooks, has served as the National Bureau of Economic Research’s director of monetary economics, and was an editor of the American Economic Review. He is still considered to be one of the top 20 authors of all time in academic economics journals despite having been out of academia for almost a decade.

Bernanke was appointed to be a member of the Federal Reserve Board of Governors in 2002. He was then appointed by President Bush to be Chairman of the President’s Council of Economic Advisors in 2005. He was then appointed by Bush to be the chairman of the Federal Reserve in 2005 and subsequently renominated by President Obama in 2009. In 2009, Time magazine named Bernanke its “person of the year.” Not a bad run-up in fame and influence for a boy from rural South Carolina.

Just to be clear, Bernanke received a top notch education in mainstream economics at Harvard and MIT under the direction of leading professors in the economics profession. He also taught at premier institutions and held key leadership roles in the profession. He is considered one of the most important researchers and publishers of his generation and is best known for his research on the Great Depression, where he added a distinction to the contributions of Milton Friedman and Anna Schwartz.

For Bernanke, the Great Depression was less about the Federal Reserve reducing the money supply (which is the Friedman and Schwartz hypothesis) and more about the bank failures that increased the cost of credit and decreased its availability, leading to a decline in aggregate demand and creating the Great Depression. For Bernanke, a downturn can lead to bank failures, which curtail credit. This can cause a further reduction in economic activity that spirals into a vicious cycle ending in economic depression. I will further address his distinction, because it is critical, in my closing remarks.

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