Earn What You Spend

To watch the rise and fall of Alan Greenspan’s stock with the public is nothing short of spectacular.  The former Federal Reserve chairman was revered as a savant gracing us with his unparalleled intellect that could keep the economy running strong.  Then, in the lightening fast manner that only public opinion is capable of, he was roundly condemned for not doing enough to prevent the current economic downturn.  He is currently accused of fueling the real estate and stock market bubbles by keeping interest rates too low for too long.

Enter an unlikely hero: Ben Bernanke.  Here is a man who spent his career studying the event we have been so fearful of repeating: the Great Depression.  It would seem that few people, then, would understand the mistakes of the past as well as Bernanke, and would thus be able to keep our economy away from the brink of disaster.  But studying a subject and facing it in the real world are frequently distinct phenomenon: the translation of professorial knowledge to policy implementation is not a sure bet. 

Thus Jim Kramer’s article in New York Magazine praising Chairman Bernanke as one of the saviors of the economy is all the more interesting: here is a soft-spoken intellect who, according to Kramer, just might have saved us from tipping into the Great Depression Part II: 

I’ll just come right out and say it: Ben Bernanke will go down as the greatest Federal Reserve chairman in history. The soft-spoken academic who has toiled in the shadows of his legendarily self-promoting predecessor, Alan Greenspan, will be known as the man who averted the Great Depression Two, a sequel that could have eliminated the United States as a world financial superpower and reduced us to this century’s Britain …

The moment of crisis has passed, the parallels to the Great Depression are gone, all because Bernanke learned the lessons of history and refused to let it repeat itself. Bernanke once seemed Lilliputian compared to Greenspan. Now their statures have been reversed.

There is something pleasing about a professor leaving academia to save the economy.  Knowledge - all too often shunned in our political system - turns out to be quite valuable in the end.