Ben Bernanke: helicopter money Concepts

Our Dollar, Your Problem: An Insider’s View of Seven Turbulent Decades of Global Finance, and the Road Ahead

by Kenneth Rogoff · 27 Feb 2025 · 330pp · 127,791 words

abroad at far lower interest rates than might otherwise be the case. The core contributions in the “Deutsche Bank trio” papers were famously memorialized in Ben Bernanke’s celebrated “global savings glut speech” in 2005, which drew heavily on their ideas.2 The Deutsche Bank trio’s message was that if Asia

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to solve “lowflation” filled the pages of top economics journals. One idea was that the Fed should employ “helicopter money,” an old Milton Friedman paradigm made famous in a speech in 2002 by Ben Bernanke, who was then a Federal Reserve governor and later became chair. Friedman’s image of helicopters flying all over

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directly print money. For a time, this earned Bernanke the moniker “Helicopter Ben.”11 When interest rates were zero and nothing seemed to increase inflation, helicopter money was lauded by numerous policy luminaries as a brilliant solution.12 After all, what could be the downside? Even if it did not work to

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recession. Having the unelected Fed Board decide who gets the money is absurd. The right to impose taxes and make transfers lies with Congress. If helicopter money is really such a great idea, Congress can always choose to issue debt and make payments to anyone it wants, and the Fed can buy

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the debt. (We will come to “modern monetary theory,” an extreme variant of this approach, in the next chapter.) If the Fed were to try helicopter money on its own, central bank independence would quickly become a distant memory; perhaps the Fed would even lose its headquarters and have to move back

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enjoyed decades of strong growth, as did Europe and Japan, and interest rates rebounded from their near-zero level during the Great Depression. Fed chair Ben Bernanke shared the stage with Summers when he gave his speech (as did I, though no one will remember) and tried to push back, arguing that

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). 22. The importance to the U.S. economy of having banks with strong balance sheets was first emphasized in 1983 in a classic paper by Ben Bernanke, for which he was awarded the 2022 Nobel Prize in economics. The original paper was basically a thought piece. Later in the 1980s, Bernanke, together

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with Mark Gertler, fleshed out the analytics. Ben Bernanke and Mark Gertler, “Inside the Black Box: The Credit Channel of Monetary Policy Transmission,” Journal of Economic Perspectives 9, no. 4 (Fall 1995): 27–48

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.S. Current Account Deficit and Economic Development: Collateral for a Total Return Swap,” Working Paper No. 10727 (National Bureau of Economic Research, September 2004). 2. Ben Bernanke, “The Global Saving Glut and the U.S. Current Account Deficit” (remarks at the Homer Jones Lecture, St. Louis, Mo., April 14, 2005). 3. Dooley

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really understood what was going on. 11. See Ben Bernanke, “Deflation: Making Sure ‘It’ Doesn’t Happen Here” (remarks before the National Economists Club, Washington, D.C., November 21, 2002). More than a decade later, he still argued that helicopter money was a plausible option. See Ben Bernanke, “What Tools Does the Fed Have Left? Part

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3: Helicopter Money,” Commentary, Brookings, April 11, 2016. 12. See, for example, Adair Turner, Between Debt and the Devil (Princeton, N

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.oxfordmartin.ox.ac.uk/videos/innovation-or-stagnation-oxford-union-debate/. My partner on “team innovation” was the South African technology entrepreneur Mark Shuttleworth. 14. Ben Bernanke is a brilliant economist, and as already intimated, his 1983 paper on the Great Depression richly deserved the Nobel Prize he received in 2022. We

Big Debt Crises

by Ray Dalio · 9 Sep 2018 · 782pp · 187,875 words

provide stimulus directly through government spending or indirectly by providing incentives for nongovernment entities to spend. At the other end, the central bank can provide “helicopter money” by sending cash directly to citizens without coordination with fiscal policy makers. Typically, though not always, there is a coordination of monetary policy and fiscal

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I) or debasing hard currency (Ancient Rome, Imperial China, 16th-century England). Printing money and doing direct cash transfers to households (i.e., “helicopter money”). When we refer to “helicopter money,” we mean directing money into the hands of spenders (e.g., US veterans’ bonuses during the Great Depression, Imperial China). How that money

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involve fiscal/monetary coordination, because that ensures that both the providing and the spending of money will occur. If central banks just give people money (helicopter money), that’s typically less adequate than giving them that money with incentives to spend it. However, sometimes it is difficult for those who set monetary

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these categories, as they have elements of more than one of them. For example, if the government gives a tax break, that’s probably not helicopter money, but it depends on how it’s financed. The government can also spend money directly without a loan financed by the central bank—that is

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helicopter money through fiscal channels. While central banks influence the costs and availabilities of credit for the economy as whole, they also have powers to influence the

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key regulators.4 The primary benefit of these meetings was that they built close working relationships among the members, most importantly between Paulson, Fed Chairman Ben Bernanke, and New York Fed President Tim Geithner, and their agencies. In all financial crises, the personalities, capabilities, and ability to work well together play crucial

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system: Use of repo agreements and commercial paper. These developed into huge channels through which banks and corporations could borrow over short periods of time. Ben Bernanke notes that “repo liabilities of US broker dealers increased by a factor of 2.5 in the four years before the crisis.”6 Large institutional

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July 15, 2008 Stocks Fall Back After Early Gains on Rescue Plan “The United States treasury secretary, Henry Paulson Jr., and the Federal Reserve chairman, Ben Bernanke, acted after the shares of Freddie Mac and Fannie Mae came under enormous selling pressure last week.” –New York Times July 16, 2008 S.E

Seven Crashes: The Economic Crises That Shaped Globalization

by Harold James · 15 Jan 2023 · 469pp · 137,880 words

of the North Atlantic, while largely sparing the powerful new emerging market economies. The answers generated by central banks, and notably the Federal Reserve under Ben Bernanke, were remarkably successful in avoiding a general collapse, or a repetition of the Great Depression. But they also created an apparently impossible exit problem: how

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Welt.2 The interwar slump seemed to turn conventional economics upside-down. Understanding what delivered the shock of the Great Depression consequently has become what Ben Bernanke memorably called the “holy grail” of macroeconomics: but we know from medieval stories that the knights almost never succeed in their quest.3 As Alfred

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make a subsequently famous bid for U.S. Steel. When he did not repeat the action on the next Monday, there was a real panic. Ben Bernanke’s study of financial instability in the Great Depression concluded that the United States was the only country in which the discretionary element of policy

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at the time by Irving Fisher as debt-deflation, one that was later built into a model of transmission mechanism as the credit channel by Ben Bernanke. International Rescues? Could there have been a coordinated international effort to prevent, halt, or reverse the collapse of demand? That would have required restarting the

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the economic recovery.”28 The Wall Street Journal commented, “It’s not going too far to say we are watching a showdown between Fed Chairman Ben Bernanke and bond investors, otherwise known as the financial markets. When in doubt, bet on the markets.”29 In Rio Rancho, New Mexico, Obama said, “We

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greater integration. Money could also be thought of as part of the weightless world, and one that central bankers were actively pushing. Bernanke’s Remedies Ben Bernanke is the first and only central banker to have been awarded the Nobel Prize in Economics. A southerner, born in Georgia in 1953, he grew

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against the central bankers: the financial journalist Brian Wesbury said, “I wish the Fed would just go away.” The investor Jim Rogers in Singapore noted, “Ben Bernanke couldn’t manage a corner lemonade stand let alone the US financial system.”120 The logic of the academic approach to central banking, which called

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Barack Obama. Controversy flared up again when it looked as if Summers would move into a major policy role in the Obama administration—especially when Ben Bernanke came to the end of his term as Federal Reserve chair and Summers looked like the obvious successor, and the details of Summers’s 2008

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?” in Macroeconomic Theory and Its Failings, ed. Steven Kates (London: Edward Elgar, 2010), 26 –39. 98. Ben Bernanke and Mark Gertler, “Agency Costs, Net Worth, and Business Fluctuations,” American Economic Review 79 (March 1989): 14 –31; Ben Bernanke and Mark Gertler, “Financial Fragility and Economic Performance,” Quarterly Journal of Economics 105 (February 1990): 87

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–114. 99. Irving Fisher, “Debt Deflation,” Economica 1, no.4 (1933): 337–357. 100. Ben Bernanke, “Japanese Monetary Policy: A Case of Self-Induced Paralysis,” in Japan’s Financial Crisis and Its Parallels to U.S. Experience, ed. Ryōichi Mikitani and

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Adam Simon Posen (Washington, D.C.: Institute for International Economics, 2000), 151. 101. Ben Bernanke and Mark Gertler, “Monetary Policy and Asset Price Volatility,” Economic Review—Federal Reserve Bank of Kansas City 84, no. 4 (Fourth Quarter 1999): 17–51

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Markets and Financial Crises, ed. Glenn Hubbard (Chicago: University of Chicago Press, 1991), 33 –68. 110. Bernanke, “Japanese Monetary Policy,” 164. 111. Ibid., 165. 112. Ben Bernanke, Thomas Laubach, Frederic S. Mishkin, and Adam S. Posen, Inflation Targeting: Lessons from the International Experience (Princeton: Princeton University Press, 1999), 310 –311; Bernanke and

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. Ben S. Bernanke, “What Tools Does the Fed Have Left? Part 3: Helicopter Money,” Brookings Institute blog post, Monday, April 11, 2016, https://www.brookings.edu/blog/ben-bernanke/2016/04/11/what-tools-does-the-fed-have-left-part-3-helicopter-money/. 116. Bob Woodward, Maestro: Greenspan’s Fed and the American Boom (New York

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Crises Changed the World (New York: Viking, 2018), 38. 119. Bernanke, Courage, 129. 120. Zachary Karabell, “Our Hero, Ben Bernanke,” Atlantic, December 13, 2012, https://www.theatlantic.com/business/archive/2012/12/our-hero-ben-bernanke-why-central-bankers-not-politicians-are-saving-the-global-economy/266210/. 121. Meltzer, History of the Federal Reserve

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://www.brookings.edu/wp-content/uploads/2014/04/liquidity-lender-of-last-resort-event.pdf; and Thomas L. Hogan, Linh Le, and Alexander William Salter, “Ben Bernanke and Bagehot’s Rules,” Journal of Money, Credit and Banking 47, nos. 2–3 (March–April 2015): 333 –348. 126. Randall Smith, Carrick Mollenkamp, Joellen

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.federalreserve.gov/newsevents/speech/bernanke20081201a.htm. 128. Ben S. Bernanke, “The New Tools of Monetary Policy,” American Economic Review 110, no. 4 (2020): 943. 129. Ben Bernanke at meeting of the Federal Open Market Committee, November 2–3, 2010, 98, https://www.federalreserve.gov/monetarypolicy/files/FOMC20101103meeting.pdf. 130. See also Lars

Framers: Human Advantage in an Age of Technology and Turmoil

by Kenneth Cukier, Viktor Mayer-Schönberger and Francis de Véricourt · 10 May 2021 · 291pp · 80,068 words

alternative box—and saddled with doubts. 3 causality we are causal-inference engines and often wrong, but this is good “I can still stop this,” Ben Bernanke remembers thinking. On the evening of Tuesday, September 16, 2008, he paced his office at the Federal Reserve and stopped at a large window. He

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a bit. In the twentieth century, a new generation conceived of the economy with an eye toward mechanical engineering but with mathematical models. One was Ben Bernanke. He devoted his career to studying financial crises and market panics, though it was considered an academic backwater. One of his chief findings was that

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of how to leverage causal structures in their environment are, more often than not, better off than organisms that care less about cause and effect. Ben Bernanke’s reasoning, similarly, was causal. But there’s a fundamental difference between Bernanke’s frame and the way most organisms react to causal structures. Most

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why this is happening? What is the silent assumption or explanation that I’m making, that may or may not be true?” That is what Ben Bernanke did the evening of September 16, 2008, when he paused in front of his office window and mulled his decision to flood the market with

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old terminal for the soldiers to train. Or recall Ben Bernanke at America’s Federal Reserve in September 2008. As he loosened the ideological constraint that the government doesn’t get involved in markets, it allowed him to conjure up the counterfactual of helicopter money and put it into action. Constraints not only help

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like switching between different maps to navigate, from chapter 2, whether we’re down in a subway or dodging traffic on Broadway. Or think of Ben Bernanke, who applied the mental model of the Great Depression from his armory of templates, at a time when some people felt that what happened on

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a Problem and Its Appearance in Consciousness,” Journal of Comparative Psychology 12, no. 2 (1931): 181–94. 3. causality Bernanke’s recollection at the window: Ben Bernanke, The Courage to Act: A Memoir of a Crisis and Its Aftermath (New York: Norton, 2015), 83. On economic history: Joel Mokyr, “The Intellectual Origins

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/global-development -professionals-network/2017/apr/06/kate-raworth-doughnut-economics-new-economics. Bernanke’s view of the Fed’s flawed policy after 1929 crash: Ben Bernanke, “Federal Reserve and the 2008 Financial Crisis,” speech given at George Washington University, March 27, 2012, C-SPAN video, 1:15:12, https://www.c

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-span.org/video/?305130-1/federal-reserve-2008-financial-crisis Ben Bernanke interviewed by Scott Pelley, 60 Minutes, “The Chairman,” March 15, 2009, YouTube video, 13:23, https://www.youtube.com/watch?v=odPfHY4ekHA. The nickname “Helicopter

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Ben”: Ben Bernanke, “Deflation: Making Sure ‘It’ Doesn’t Happen Here,” speech to the National Economists Club, Washington, DC, November 21, 2002, transcript, https://www.federalreserve.gov/BOARDDOCS

The Production of Money: How to Break the Power of Banks

by Ann Pettifor · 27 Mar 2017 · 182pp · 53,802 words

arrogantly blames others (including politicians and consumers) for financial crises. As evidence of this arrogance, Professor Steve Keen in Debunking Economics cites the words of Ben Bernanke, governor of the US Federal Reserve at the time of the crisis: ‘the recent financial crisis was more a failure of economic engineering and economic

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’s, had led to financial mayhem. The 2007–09 Global Financial Crisis was in its earliest stages. But on that day something historically unprecedented happened. Ben Bernanke gave the first-ever broadcast interview by a Federal Reserve bank governor to an American journalist. The journalist was Scott Pelly. The show was CBS

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, credit unions or crowdfunding would be woefully insufficient for the Herculean task of transforming the economy away from fossil fuels. The ‘People’s QE’ and ‘helicopter money’ With the discovery that private banks can create money ex nihilo – out of thin air – came a simultaneous discovery: that central banks can do the

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honourable – to ensure that a publicly resourced central bank benefits the whole of society and not just bankers. But let us examine the proposals for ‘helicopter money’ more carefully. Just as with calls for the nationalisation of the money supply, the calls for central bankers to use their powers for wider purposes

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.32 •Strategic QE – Proposed by the New Economics Foundation •Green QE – Proposed by Victor Anderson, endorsed by Molly Scott Cato (MEP) •Helicopter Drop – Proposed by Ben Bernanke (and a number of others) and based on Milton Friedman’s ‘Helicopter Drops’ paper of 1948. •People’s QE (based on Green Infrastructure QE) – Proposed

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central banks within the EU use their money creating powers to finance lending to the private sector for green infrastructure projects and green businesses’.34 Ben Bernanke’s Helicopter Drops takes inspiration from Milton Friedman’s (1948) ‘Helicopter Drop’ thought experiment (considering what might happen if newly printed cash were to be

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representatives should be masters of this process with the central bank as servant – albeit an independent, open-minded and well-qualified servant. Donald Trump and ‘helicopter money’: the economic, social and political consequences It is also not acceptable, in my view, for central bankers or government representatives to be granted money-printing

The Death of Money: The Coming Collapse of the International Monetary System

by James Rickards · 7 Apr 2014 · 466pp · 127,728 words

Panic of 2008, in which tens of trillions of dollars in paper wealth disappeared seemingly overnight. The Federal Reserve chairmanship passed from Alan Greenspan to Ben Bernanke in February 2006, just as the housing calamity was starting to unfold. Bernanke inherited Greenspan’s deflation problem, which had never really gone away but

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the overall economy. Lack of investment was a large contributor to the duration of the Great Depression. Scholars from Milton Friedman and Anna Schwartz to Ben Bernanke have identified monetary policy as a leading cause of the Depression. But far less work has been done on why the Great Depression lasted so

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in numerous pronouncements, including President Obama’s 2010 State of the Union address, where he announced the National Export Initiative, and former Federal Reserve chairman Ben Bernanke’s Tokyo speech on October 14, 2012, in which he threatened trading partners with higher inflation if they did not allow their currencies to strengthen

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. Japan and the U.K. are part of a global monetary experiment orchestrated by the U.S. Federal Reserve and articulated by former Fed chairman Ben Bernanke in two speeches, one given in Tokyo on October 14, 2012, and one given in London on March 25, 2013. In his 2012 Tokyo speech

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the Treasury and the banks and is firmly opposed by the Fed. This explains Alan Greenspan’s extraordinary low-interest-rate policies in 2002 and Ben Bernanke’s zero-rate policy beginning in 2008. From the Fed’s perspective, aiding the economy and reducing unemployment are incidental by-products of the drive

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difference may be that Japan gets there first. CHAPTER 11 MAELSTROM Nobody really understands gold prices, and I don’t pretend to understand them either. Ben Bernanke Former Federal Reserve Board chairman July 18, 2013 I think that, at this time, this global civilisation has gone beyond its limits . . . because it has

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conclusion comes not from a Fed critic but from Frederic S. Mishkin, one of the most eminent monetary economists in the world and mentor to Ben Bernanke and other Fed governors and economists. In his February 2013 paper “Crunch Time: Fiscal Crises and the Role of Monetary Policy,” written with several colleagues

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by the President in State of the Union Address,” January 27, 2010, http://www.whitehouse.gov/the-press-office/remarks-president-state-union-address; and Ben Bernanke, “U.S. Monetary Policy and International Implications,” remarks at IMF–Bank of Japan seminar, October 14, 2012, http://www.federalreserve.gov/newsevents/speech/bernanke20121014a.htm

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, The Applied Theory of Money (London: Macmillan, 1950). acolytes of the theory of money as an arm of state power . . . : Paul McCulley and Zoltan Pozsar, “Helicopter Money: Or How I Stopped Worrying and Love Fiscal-Monetary Cooperation,” GIC Global Society of Fellows, January 7, 2013, http://www.interdependence.org/wp-content/uploads

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/2013/01/Helicopter_Money_Final1.pdf; Stephanie A. Bell and Edward J. Nell, eds., The State, the Market, and the Euro: Metallism versus Chartalism in the Theory of Money

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: ‘Night Dragon,’” February 10, 2011, http://www.mcafee.com/us/resources/white-papers/wp-global-energy-cyberattacks-night-dragon.pdf. McCulley, Paul, and Zoltan Pozsar. “Helicopter Money: Or How I Stopped Worrying and Love Fiscal-Monetary Cooperation.” GIC Global Society of Fellows, January 7, 2013, http://www.interdependence.org/wp-content/uploads

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/2013/01/Helicopter_Money_Final1.pdf. Macdonald, Alistair, Paul Vieira, and Will Connors. “Chinese Fly Cash West, by the Suitcase.” Wall Street Journal, January 2, 2013, http://online.wsj

Money and Government: The Past and Future of Economics

by Robert Skidelsky · 13 Nov 2018

the community would cause prices to double, thus restoring the real value of their cash balances. This is the source of Friedman’s idea of ‘helicopter money’. In technical 63 H i s t ory of E c onom ic T houg h t terms, the demand for ‘real balances’ is brought

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’. However, interest rates play no independent part in determining the quantity of money: they are merely the means by which, in a banking system, the helicopter money gets into the pockets of those who will spend it. This is because Fisher and Marshall still thought of money as cash rather than credit

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President of the Federal Reserve Bank of New York. Their conclusion had a powerful effect on those in charge of central banks in 2008, especially Ben Bernanke, Chairman of the Fed in 2007–8. According to Tim Congdon: ‘The monetary interpretation of the Great Recession pivots on the proposition that the collapses

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Depression of 1929– 32 was caused by the failure of the Fed to prevent the collapse of the money supply has become orthodox. It influenced Ben Bernanke, Chairman of the Federal Reserve Board from 2006 to 2014, and the policy of quantitative easing adopted to meet the 2008–9 recession. In addition

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and instituting rule-type behaviours to provide consistent signals to markets. (This became standard practice until 2012, when it adopted an explicit inflation target under Ben Bernanke.)37 The European Central Bank, established in 1997, was also given an inflation target, to be achieved by varying short-term interest rates. In Britain

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contractionary influence of the Budget.’ Financial Times, 20101 ‘The problem with QE is that it works in practice, but it doesn’t work in theory.’ Ben Bernanke, 2014 2 ‘While monetary policy . . . provided the necessary emergency medicine after the financial crash, we have to acknowledge there have been some bad side-effects

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a m m e s, 2 0 08 –16 The Fed was quickest off the mark. The need for large-scale QE was the lesson Ben Bernanke drew from the Friedman and Schwartz story of the Great Depression. Shortly before he became Chairman of the Federal Reserve Board in 2006, Bernanke wrote

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contrast, it was the Great Depression of 1929–32, and the need to avoid a repeat of that, which had the biggest historical impact on Ben Bernanke and other US policymakers. Governments whose policies fail to achieve their promised results always claim that they were pursuing policies that would have succeeded had

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the main surplus area, with the Mediterranean countries running persistent deficits. (see Figure 64) This pattern of imbalances, while somewhat worrying, was regarded as temporary. Ben Bernanke wrote: ‘Fundamentally, I see no reason why the whole process [of rebalancing] should not proceed smoothly.’4 Martin Wolf, the respected Financial Times columnist, published

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July 2017]. Bernanke, B. (2016), What Tools Does The Fed Have Left? Part 3: Helicopter Money. Brookings: Blogs. 14 April. Available at: https://www.brookings.edu/ blog/ben-bernanke/2016/04/11/what-tools-does-the-fed-have-left-part3-helicopter-money/ [Accessed 14 December 2017]. Bernstein, J. (2010), Deficit reduction is not the enemy of

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–1815. New York: Holt, Rinehart & Winston. 430 Bi bl io g r a p h y Brookings Institution (2014), A Discussion with Federal Reserve Chairman Ben Bernanke. Available at: https://www.brookings.edu/wp-content/ uploads/2014/01/20140116_bernanke_remarks_transcript.pdf [Accessed 10 July 2017]. Brown, W. A. (1940), The

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: QE for the People. Available at: http://voxeu.org/article/combatting-Eurozone-deflation-qepeople [Accessed 12 July 2017]. Muellbauer, J. (2016), Helicopter Money and Fiscal Rules. Available at: http://voxeu.org/article/helicopter-money-and-fiscal-rules [Accessed 5 July 2017]. Munchau, W. (2010), Even Eurozone optimists are not optimistic. Financial Times, 11 July

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theory, 180–81, 183, 194, 206–11 and Cartesian distinction, 22 as Fisher’s heir, 278 The Great Contraction (with Schwartz; 1865), 105 idea of ‘helicopter money’, 63 and monetary base, 185, 280 and Mont Pelerin Society, 176–7 and ‘natural’ rate of unemployment, 163, 177, 181, 195, 206, 208 onslaught on

House of Debt: How They (And You) Caused the Great Recession, and How We Can Prevent It From Happening Again

by Atif Mian and Amir Sufi · 11 May 2014 · 249pp · 66,383 words

to 65 percent. Strong Economic Fundamentals? In October 2005, as the mortgage-credit boom was reaching its frenzied height, then Council of Economic Advisers chairman Ben Bernanke touted recent advancements in the U.S. economy. As he testified to Congress, “On each of the three indicators of the real economy—GDP growth

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their creditors and shareholders? The economic theory behind government protection is that banks perform unique services that are difficult to replicate by any other institution. Ben Bernanke, long before he was chairman of the Federal Reserve, advanced this view most forcefully in his analysis of the Great Depression. In his view, “intermediation

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larger MPC of indebted home owners is crucial for understanding why the housing crash was so much worse than the tech crash. In April 2013, Ben Bernanke was asked how macroeconomics should change in response to the Great Recession.22 To answer the question, Bernanke pointed to this same fact that the

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the Fed for keeping the money supply too tight and failing to prevent deflation. On the occasion of Milton Friedman’s ninetieth birthday in 2002, Ben Bernanke—a former professor of economics at Princeton and an expert on the Great Depression—publicly pledged: “I would like to say to Milton and Anna

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cash into the economy may at first seem crazy, but reputable economists and commentators have suggested exactly such a policy during severe economic downturns.8 Ben Bernanke, only a few years before he was chairman of the Fed, suggested helicopter drops for Japanese central bankers in the 1990s, earning the nickname “Helicopter

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February 2013 that “the view that it is never right to respond to a financial crisis with monetary financing of a consciously expanded fiscal deficit—helicopter money, in brief—is wrong. It simply has to be in the toolkit.”10 Willem Buiter used rigorous modeling to show that such helicopter drops would

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lowest in this calculation are the top and bottom 20 percent of the credit score distribution, and the denial rates are as of 1998. 6. Ben Bernanke, testimony on “The Economic Outlook” on October 20, 2005, before the Joint Economic Committee, 109th Congress. 7. For details on these calculations, see Atif Mian

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, Washington, DC, September 24, 2008), New York Times, http://www.nytimes.com/2008/09/24/business/economy/24text-bush.html?pagewanted=all&_r=0. 15. Ben Bernanke, “Nonmonetary Effects of the Financial Crisis in the Propagation of the Great Depression,” American Economic Review 73 (1983): 257–76. 16. The NFIB survey, led

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March 25, 2013. The transcript is on Brad DeLong’s website located here: http://delong.typepad.com/sdj/2013/04/reconstructing-macroeconomics-exchange-mervyn-king-ben-bernanke-olivier-blanchard-axel-weber-larry-summers.html. 23. Clea Benson, “Obama Housing Fix Faltered on Carrots-Not-Sticks Policy,” Bloomberg News, June 11, 2012. 24

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” (working paper, Harvard University, May 2013). Chapter Eleven 1. Irving Fisher, “The Debt-Deflation Theory of Great Depressions,” Econometrica 1 no. 4 (1933): 341. 2. Ben Bernanke, “On Milton Friedman’s Ninetieth Birthday” (speech, Conference to Honor Milton Friedman, University of Chicago, November 8, 2002). 3. Technically, the Federal Reserve also purchases

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of Money and Other Essays (Chicago: Aldine, 1969), 1–50. 9. Ben Bernanke, “Japanese Monetary Policy: A Case of Self-Induced Paralysis” (paper, Princeton University, 1999). 10. Martin Wolf, “The Case for Helicopter Money,” Financial Times, February 12, 2013. 11. Willem H. Buiter, “Helicopter Money: Irredeemable Fiat Money and the Liquidity Trap; Or, Is Money Net

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, 69–70, 128–30, 167–68; wage growth in, 67; wealth inequality in, 19–21, 23–25, 45, 71 Hall, Robert, 195n8 Hartley, Daniel, 27 helicopter money, 156–57 Hellwig, Martin, 185 “Help to Buy” program (United Kingdom), 180–81 Herkenhoff, Kyle, 69 high-credit-score owners, 196n5; home equity lending to

The Curse of Cash

by Kenneth S Rogoff · 29 Aug 2016 · 361pp · 97,787 words

many, but some of the main factors include high savings from fast-growing emerging markets and aging populations in advanced economies, factors that in 2005 Ben Bernanke famously pointed to in describing the “global savings glut.”2 Since 2008, intense post–financial crisis regulation and risk aversion have also pushed real interest

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central banks that lie at the core of global financial stability in today’s world. The famous “taper tantrum” of May 2014 (when Fed chair Ben Bernanke merely hinted at eventual monetary tightening) could seem like a walk in the park by comparison. It is easy to imagine that the transition from

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government bonds, US 10-year bond rates dropped by 40 basis points (0.4%) within the hour. When on May 22, 2013, Federal Reserve chairman Ben Bernanke suggested that the Federal Reserve would begin to taper back its roughly $85 billion a month purchases of bonds and mortgage-backed securities, global financial

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be quite modest.13 One idea that has gained some traction is for the central bank to print money and hand it out to consumers. Ben Bernanke suggested this perfectly reasonable paradigm when he was a Fed governor back in 2002 as a solution for Japan’s deflation problem. No good deed

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Turner, former chairman of the United Kingdom’s Financial Services Authority, has advocated central bank–financed transfers in his 2015 book on debt, and the helicopter money often appears in op-eds and the blogosphere as a growth elixir.14 There is nothing fundamentally wrong with the idea.15 However, it is

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important to realize that helicopter money does not really add any new instruments to the arsenal of macroeconomic stabilization tools. Because there is so much confusion surrounding helicopter money, it is worth pausing on this point for a moment. If the economy is

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not at the zero bound, helicopter money is essentially the same as having the Treasury present a $500 check to every household

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at the zero interest rate bound, the only difference is that the central bank would use quantitative easing to mop up the newly issued debt. Helicopter money can only expand the options if it is accompanied by some other institutional change. For example, if the introduction of

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accompanied by a change in the central bank’s inflation-targeting preferences, then of course there will be added effects. Equivalently, if the advent of helicopter money is accompanied by new legislation that somehow helps the central bank to commit to inflationary finance in the future, that too would make an important

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difference. In both cases, helicopter money is just a gimmick to effect a policy change that might not otherwise be politically feasible, perhaps leveraging the central bank’s reputation for being

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old debate, going back at least to the 1990s, when Alan Greenspan was chair of the Federal Reserve. The classical point of view, embodied in Ben Bernanke (Fed chair after Greenspan) and Mark Gertler’s well-known 1999 Jackson Hole conference paper, is that monetary authorities should take into account financial stability

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ambiguous.3) The classical hands-off approach still leaves open the question of what should be done to manage the risk of systemic financial crises. Ben Bernanke has argued forcefully that the right remedy for dealing with debt buildups is so-called macroprudential regulation, for example, putting limits on loan-to-value

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standard. Paul’s book inspired a wave of venom being hurled at the Fed, culminating with Texas Governor Rick Perry’s attack on Fed chair Ben Bernanke in the 2012 Republican presidential primaries, where Perry stated, “Printing more money to play politics at this particular time in American history is almost treasonous

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emerging markets and even developing countries.15 Even the US Federal Reserve, long resistant to the trend, finally adopted inflation targeting under the leadership of Ben Bernanke, who, as an academic, had penned an important book on the topic in 2001 with Thomas Laubach, Frederic Mishkin, and Adam Posen.16 A central

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upward pressure on the real interest rate is smaller. 14. Turner (2015). See also Galí (2014) for quantitative estimates. 15. It is worth noting that helicopter money would do nothing at the zero bound if Ricardian equivalence holds (as mentioned in chapter 8) and the public regards the future taxes required to

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later in the current chapter, would still have an effect, because it represents a transfer from rich to poor. 16. To consider the equivalence between helicopter money and other government policies in a bit more depth, it is easiest to begin with the case of no change to the central bank’s

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may be converted to paper currency) to mop up debt until it reaches exactly the same equilibrium as with helicopter money! Introducing the zero bound does exactly nothing to break up the equivalence between helicopter money and combinations of other government policies. 17. Feldstein (2002, p. 8). 18. Correia et al. (2013) considerably refine

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Symposium. Available at https://www.irs.gov/pub/irs-soi/mazur.pdf. See also National Tax Journal 56 (3): 689–700. Buiter, Willem H. 2003. “Helicopter Money, Irredeemable Fiat Money and the Liquidity Trap.” NBER Working Paper 10163 (December). Cambridge, MA: National Bureau of Economic Research. ———. 2005. “Overcoming the Zero Bound: Gesell

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, 235n3 Gutenberg, Johannes, 22 Guzmán, “El Chapo,” 69, 72 Hall, Robert E., 244n10 Hamilton, James, 247n30 Hastert, J. Dennis (congressman), 71 Hawala transfer system, 68 helicopter money, 155–56, 249n16 Hellwig, Martin, 242n12 Henderson, Dale, 245n14, 254n4 Henry VIII (king of England), 20, 184 Hicks, John R., 234n6 history of currency, 15

The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis

by James Rickards · 15 Nov 2016 · 354pp · 105,322 words

roll over their commercial paper in the panic that year. It was the General Electric freeze, more than Wall Street bank failures, that most panicked Ben Bernanke, Federal Reserve chairman at the time. The General Electric credit collapse spread contagion to all of corporate America, which led directly to government guarantees of

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if allowed to go unchecked. Therefore the bar to use of IEEPA’s confiscatory powers is quite low. Treasury Secretary Hank Paulson and Fed chairman Ben Bernanke have repeatedly said they lacked authority to seize Lehman Brothers during the Panic of 2008. This is false. There was ample authority under IEEPA. Either

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banks’ ability to expand the money supply. Friedman’s views were influential in policy responses to the 2008 global financial crisis and its aftermath by Ben Bernanke, and later Janet Yellen. Friedman’s scholarly research and theory of money were impressive. He earned the Nobel Prize in economics in 1976. Yet Friedman

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that could not be solved with the right application of spending and money printing. Today, Keynes and Friedman hold hands in a hybrid theory called helicopter money. Friedman’s views were decisive in the IMF’s decision to demonetize gold, and in unilateral decisions of major economies to abandon fixed exchange rates

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2008 when the most powerful woman regulator, Sheila Bair, chairwoman of the FDIC, was sidelined by a new boys’ club of Summers, Tim Geithner, and Ben Bernanke. Bair’s dead-on advice to close insolvent banks was scientific. Instead the boys’ club bailed out bank cronies at taxpayer expense. Born in 1998

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collateral that proved illiquid and nearly worthless. On August 3, 2007, CNBC’s Jim Cramer launched into a live TV tirade against Federal Reserve chairman Ben Bernanke’s ignorance of the illiquidity infecting capital markets. Cramer told colleague Erin Burnett, I have talked to the heads of almost every one of these

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that invested in subprime mortgage assets. At the Federal Open Market Committee (FOMC) on June 28, 2007, just prior to the Bear Stearns fund meltdown, Ben Bernanke and the FOMC said, “The economy seems likely to continue to expand at a moderate pace over coming quarters.” Shortly before, on March 28, 2007

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Fed cannot see the new bubble about to burst, then it will not stop it from bursting. Faust is a Fed insider handpicked by Chairman Ben Bernanke in 2012 to serve as special adviser to the board of governors. The term “insider” is often used loosely to describe those who might only

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stock market crash in October of that year. That crash is frequently cited as marking the onset of the Great Depression. Both Alan Greenspan and Ben Bernanke support the Friedman and Schwartz critique. Greenspan received praise for letting the dot-com bubble that began in 1996 pop on its own in 2000

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end from which there was now no exit? Faust didn’t answer the question directly. Instead he mused that fifty years from now, “a new Ben Bernanke will come along, a young scholar who would look back at the 1930s and this period we’re in now and compare the approaches to

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. In 2015, I spoke privately with two of the world’s most powerful central bankers on this topic. On May 27, 2015, I spoke to Ben Bernanke, former chairman of the Federal Reserve Board, in Seoul, South Korea. Two weeks later, on June 11, I spoke to John Lipsky, former head of