Ben Bernanke: Person of the Year

Time magazine has settled the much-anticipated question of its choice for “Person of the Year” for 2009.  It’s Ben Bernanke,  the scholarly chairman of the Federal Reserve, and “the most important and least understood force shaping the American – and global – economy.”  A former Princeton professor well versed in the causes and cures of the Great Depression, the 56-year-old Bernanke reinvented the Federal Reserve once global markets imploded in the fall of 2008.  Bernanke also has a compelling personal history, having been raised Jewish in small-town South Carolina during the Civil Rights era.

Time, commenting on Bernanke’s achievements over the last year, notes that “He knew how the passive Fed of the 1930s helped create the calamity – through its stubborn refusal to expand the money supply and its tragic lack of imagination and experimentation.  Chairman Bernanke of Washington was determined not to be the Fed chairman who presided over Depression 2.0.  So when turbulence in U.S. housing markets metastasized into the worst global financial crisis in more than 75 years, he conjured up trillions of new dollars and blasted them into the economy; engineered massive public rescues of failing private companies; ratcheted down interest rates to zero; lent to mutual funds, hedge funds, foreign banks, investment banks, manufacturers, insurers and other borrowers who had never dreamed of receiving Fed cash; jump-started stalled credit markets in everything from car loans to corporate paper; revolutionized housing finance with a breathtaking shopping spree for mortgage bonds; blew up the Fed’s balance sheet to three times its previous size; and generally transformed the staid arena of central banking into a stage for desperate improvisation.  He didn’t just reshape U.S. monetary policy; he led an effort to save the world economy.”

What’s remarkable is that Bernanke has achieved all of this in slightly more than one year.

Throughout 2009, Bernanke deposited unprecedented amounts of money into the banking system in entirely new ways, while charting a framework for the Fed’s ultimate return to normality.  He oversaw the financial stress tests that calmed the markets, and launched a ground-breaking public relations campaign to make the Fed more comprehensible to ordinary people.  According to Time, Bernanke’s “creative leadership helped ensure that 2009 was a period of weak recovery rather than catastrophic depression, and he still wields unrivaled power over our money, our jobs, our savings and our national future.  The decisions he has made, and those he has yet to make, will shape the path of our prosperity, the direction of our politics and our relationship to the world.”