Bernanke's Test: Ben Bernanke, Alan Greenspan, and the Drama of the Central Banker

Though a phrase like ""the drama of the central banker"" might once have drawn snickers, today the chairman of the Federal Reserve has become something of a star. This contemporary history, from the 1970s chairmanship of Paul Volcker on, provides an excellent introduction to the current financial crisis. Easy credit in the early-mid 2000s catalyzed the subprime mortgage debacle, but Dutch author and economist Van Overtveldt (The Chicago School) defends the Fed throughout, arguing that low interest rates kept Japanese-style deflation at bay. It's early for predictions, but Van Overtveldt portrays Bernanke as the man for the season: an academic focused on the Great Depression, Bernanke became a member of the Fed's Board of Governors in 2002. Though conventional, Bernanke's present approach-further cutting the federal funds rate to spur liquidity, keeping his hands off interest rates-and belief in regulation, set him apart from Greenspan, while his commitment to transparency and clear communication align him with the new administration. Anyone who wants to understand the role of the Fed in the current crisis will find this an accessible primer.