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Showing posts from March 27, 2012

Bernanke out to prevent repeat of Great Depression

Business Times - 28 Mar 2012


Bernanke out to prevent repeat of Great Depression

By LEON HADAR
WASHINGTON CORRESPONDENT

IT is one of the decisions made by the US Federal Reserve in the past that has intrigued contemporary economic historians. The tightening of credit by Marriner Eccles, the head of the Fed in 1936-37 has been blamed for the collapse of the US stock market in 1937 and the ensuing return of the Great Depression - after several years during which the New Deal policies pursued by President Franklin D Roosevelt had been leading the economy towards recovery.

One of the economists who have studied the ramification of that Eccles decision has been former Princeton professor Ben Bernanke who, in his current job as the Fed chairman, seemed to be trying to apply the lessons of his academic research.

Mr Bernanke has stated in the past that he considered Mr Eccles' decision to tighten monetary policy - at the time when the US economy was showing signs of getting out of the depressio…