Bookcase : Ben Bernanke’s Fed: The Federal Reserve After Greenspan

• Ethan S Harris
• Harvard Business Press
• RRP $44.95

Ben Bernanke – the bookish bloke who replaced the legendary Alan Greenspan as chairman of the US Federal Reserve in February 2006.
Bernanke’s job has become increasingly important as Wall Street crashed, the economy shrunk and the US experienced its most severe financial crisis since the Great Depression.
His handling of the crisis hasn’t won universal admiration: some pundits in Washington and on Wall Street want him replaced. Harris disagrees.
He credits Bernanke with having deeper understanding of the academic research than his predecessor and with tending to rely more on the views of other economists and the Federal Reserve.
Sure, the US has slumped on Bernanke’s watch, but Harris says mostly that’s because he inherited bubbles that were about to burst in the housing and credit markets.
And while Bernanke was slow in responding to the scope of the housing slowdown and credit crisis, Harris reckons he deserves another term as chairman of The Fed (some say it’s the second most powerful job in the US).
“The Bernanke Fed has done reasonable job with the hand it has been dealt,” he writes.
And it’s no bad thing Bernanke might lack his predecessor’s love of the spotlight – he is better communicator than Greenspan, who was renowned for his use of cryptic, often impenetrable language.
Trouble is, investors now try to read between the lines of Bernanke’s statements as they had to do with Greenspan, although probably what the new chairman says is what he means to say.
The book provides useful primer on monetary policy management for laypeople too – Harris explains how monetary policy works, the need for central bank to be politically independent, how the Fed communicates – and discusses Bernanke’s ideas such as the importance of inflation targeting.
He looks back at Greenspan’s performance, too, with fair mix of praise and criticism.
Alas, the book had gone to press before American authorities were called in to clean up the Wall Street mess and grapple with the exacerbation of global credit crunch.

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