2008 Woodie Awards
Bernanke Nominated as Fed. Reserve Chairman
Rex Nutting (Knight-Ridder Tribune)
Issue date: 10/28/05 Section: Life & Times
WASHINGTON - President Bush has nominated Ben Bernanke, his top economic adviser and a leading member of the Federal Reserve fraternity, to succeed Federal Reserve Chairman Alan Greenspan.
Greenspan, who has led the U.S. central bank for 18 years, must leave his post by Jan. 31.
Like Greenspan, Bernanke is low-key, soft-spoken and listened to carefully by financial markets.
He was a leading academic on monetary policy at Princeton University for 17 years before joining the Federal Reserve Board in 2002.
Bernanke, 51, the chairman of the White House Council of Economic Advisers, was so apolitical that friends at Princeton said they were surprised to discover that he was a Republican.
Fed insiders will breath a sigh of relief from the choice. They were most concerned that Bush would reach outside the loose Fed fraternity to pick a new Fed chief.
Bernanke is not only inside the Fed family, he is a star. He was always on the short list of likely replacement candidates, in addition to Bush insider Glenn Hubbard and Harvard economics Professor Martin Feldstein.
Bernanke made his mark shortly after joining the Fed in August 2002. Later that year, the economy was teetering on the verge of deflation, or a general decline in prices. Deflation is pernicious because it erodes asset values and saps consumer willingness to spend. The Japanese economy has been crippled by deflation since the early 1990s.
In a speech in November 2002, Bernanke laid out an aggressive Fed strategy to ward off deflation. In addition to rate cuts, Bernanke said the Fed had a variety of weapons to ward off deflation, including buying Treasury bonds back from the market.
The market drew confidence from the Fed's tough stance. In the end, the Fed slashed interest rates to a 40-year low of 1.0 percent, but the threat of deflation eased in the summer of 2003 without the Fed having to resort to more groundbreaking measures.
Bernanke is also an outspoken advocate of formal inflation targets, under which the Fed would state an acceptable range of inflation and target monetary policy to achieve that goal.
Under this regime, which is gaining in use around the world, the central banks sets a target yearly growth average.
Greenspan, who has led the U.S. central bank for 18 years, must leave his post by Jan. 31.
Like Greenspan, Bernanke is low-key, soft-spoken and listened to carefully by financial markets.
He was a leading academic on monetary policy at Princeton University for 17 years before joining the Federal Reserve Board in 2002.
Bernanke, 51, the chairman of the White House Council of Economic Advisers, was so apolitical that friends at Princeton said they were surprised to discover that he was a Republican.
Fed insiders will breath a sigh of relief from the choice. They were most concerned that Bush would reach outside the loose Fed fraternity to pick a new Fed chief.
Bernanke is not only inside the Fed family, he is a star. He was always on the short list of likely replacement candidates, in addition to Bush insider Glenn Hubbard and Harvard economics Professor Martin Feldstein.
Bernanke made his mark shortly after joining the Fed in August 2002. Later that year, the economy was teetering on the verge of deflation, or a general decline in prices. Deflation is pernicious because it erodes asset values and saps consumer willingness to spend. The Japanese economy has been crippled by deflation since the early 1990s.
In a speech in November 2002, Bernanke laid out an aggressive Fed strategy to ward off deflation. In addition to rate cuts, Bernanke said the Fed had a variety of weapons to ward off deflation, including buying Treasury bonds back from the market.
The market drew confidence from the Fed's tough stance. In the end, the Fed slashed interest rates to a 40-year low of 1.0 percent, but the threat of deflation eased in the summer of 2003 without the Fed having to resort to more groundbreaking measures.
Bernanke is also an outspoken advocate of formal inflation targets, under which the Fed would state an acceptable range of inflation and target monetary policy to achieve that goal.
Under this regime, which is gaining in use around the world, the central banks sets a target yearly growth average.