The Nobel committee has awarded its 2022 prize for economics to economists Douglas Diamond of the University of Chicago Booth School of Business, Philip Dybvig of Washington University’s Olin School of Business in St. Louis, and to former Federal Reserve Chairman and current Brookings Institute fellow, Ben Bernanke. If you don’t remember Ben Bernanke, recall that he’s the one who laid the groundwork for today’s rampant inflation by abandoning all the rules and norms of Federal Reserve policy in order to bail out America’s banks. What this head scratcher of a Nobel for Bernanke does more than anything is to promote the reckless behavior exposed during the financial crisis to central bankers today. CNBC’s Jenni Reid reports:
U.S.-based economists Ben Bernanke, Douglas Diamond and Philip Dybvig were awarded the Nobel prize in economic sciences for 2022 for their research on banks and financial crises.
Bernanke was chairman of the Federal Reserve from 2006 to 2014 and is now at the Brookings Institution in Washington, D.C. Diamond is a professor at the University of Chicago Booth School of Business, and Dybvig is a professor at the Olin Business School of Washington University in St. Louis.
The Nobel committee said their work in the early 1980s had “significantly improved our understanding of the role of banks in the economy, particularly during financial crises,” and in showing why it is vital to avoid bank collapses. They added this was “invaluable” during the 2008-09 financial crisis and the coronavirus pandemic.
Bernanke’s analysis of the Great Depression in the 1930s showed how and why bank runs were a major reason the crisis was so long and severe. Diamond and Dybvig’s work, meanwhile, looked at the societally important role banks play in smoothing the potential conflict between savers wanting short-term access to their money and the economy needing savings to be put into long-term investments; and how governments can help prevent bank runs by providing deposit insurance and acting as a lender of last resort.
The winners of the prize — officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel — receive 10 million Swedish krona ($883,000) to be split between them.
The Royal Swedish Academy of Sciences select the winners from a list of candidates recommended by the Economic Sciences Prize Committee. This makes its selection from names submitted by around 3,000 professors, previous winners and academy members by invitation. People cannot nominate themselves.
Action Line: America is only now coming to terms with the damage Ben Bernanke did during his term as Federal Reserve Chairman, and the country is being forced to endure rapid interest rate increases to undo some of that damaging policy. If you need help building an investment portfolio with inflation in mind, let’s talk. Until then, get to know me better by clicking here to subscribe to my free monthly Survive & Thrive letter.
E.J. Smith - Your Survival Guy
Latest posts by E.J. Smith - Your Survival Guy (see all)
- If You’re a Highly Effective Person, We Should Talk - March 24, 2023
- What’s Happening to Charles Schwab? - March 24, 2023
- Prepare for the Predictable - March 24, 2023
- Is Vanguard Voting Against Your Political Beliefs? - March 23, 2023
- Call It the Difference between Normal and Crazy - March 23, 2023