If anyone should have been prepared for the credit crunch it was Federal Reserve chairman Ben Bernanke (pictured right). Much of his academic reputation, which is immense, was built upon his work on the causes of depressions and, specifically, the Great Depression.
Although central bankers and economists assumed that advances in economic understanding — a significant portion of which came from Bernanke — had made depressions avoidable, Japan’s oft-discussed lost decade of deflation raised some uncomfortable questions.
Here was a nation not unlike the US and large Western European countries, with a powerful industrial base, sophisticated financial sector, and a modern, mature economy, which became mired in monetary quicksand, unable to exfiltrate itself from economic stagnation, despite following the playbook economists throught could avoid just such scenarios. Why?
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Filed under: Economics, Bernanke, Credit Crunch, Crisis, Depressions, Economics, Economy, Federal Reserve, Fiscla Policy, Great Depression, Japan, Krugman, Lost Decade, Monetary Policy, Quantitative Easing, Recession, The Fed