Current Economic and Financial Conditions

Extraordinary Times Have Required Extraordinary Measures

By Ben S. Bernanke

Ben S. Bernanke was sworn in on February 1, 2006, as chairman and a member of the Board of Governors of the Federal Reserve System. Dr. Bernanke was chairman of the President's Council of Economic Advisers from June 2005 to January 2006 and a member of the Board of Governors of the Federal Reserve System from 2002 to 2005. He has been a visiting scholar at several regional Federal Reserve Banks and a member of the Academic Advisory Panel at the Federal Reserve Bank of New York (1990-2002). Dr. Bernanke had been a professor of economics and public affairs at Princeton University from 1985 to 2002. Before arriving at Princeton, he was on the faculty of the Graduate School of Business at Stanford University. His teaching career also included New York University and the Massachusetts Institute of Technology (MIT). Dr. Bernanke has published many articles on a wide variety of economic issues, including monetary policy and macroeconomics, and he is the author of several scholarly books and two textbooks. He received a B.A. in economics in 1975 from Harvard University (summa cum laude) and a Ph.D. in economics in 1979 from MIT.

Although the Federal Reserve strongly favors private-sector solutions to private-sector problems, the risk of financial instability in the United States and in much of the rest of the world has implied the need to take extraordinary actions on the part of governments and central banks. The complexity of the problems has in some instances required situation-specific responses. Enactment of the Emergency Economic Stabilization Act, especially the Troubled Asset Relief Program, is an important step to deal with a systemic financial problem of historic dimensions. Fortunately, economic policymakers have learned the lessons of history and have intervened while the majority of financial institutions still have adequate capital and liquidity to provide credit to the economy. Timely government intervention, together with the natural recuperative power of financial markets, will lay the groundwork for financial and economic recovery.

Presented at the National Association for Business Economics 50th Annual Meeting, Washington, D.C., October 7, 2008

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