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Alumnus takes reins of Federal Reserve

Ben S. Bernanke
Ben S. Bernanke
Photo / L. Barry Hetherington

MIT alumnus and macroeconomist Ben S. Bernanke assumes leadership of the Federal Reserve on Feb. 1. The head of the Fed is widely considered to be the world's most powerful economist.

A former chairman of the President's Council of Advisors and a member of the Fed's Board of Governors since 2002, Bernanke (Ph.D. 1979) was appointed by President Bush and approved by the U.S. Senate to replace Alan Greenspan, who has been the Fed chairman since 1987.

When he was designated to serve as the nation's "banker in chief," Bernanke declared his first priority would be to "maintain continuity with the policies and strategies established during the Greenspan years."

Six months into his new role, Bernanke will take a break from his whirlwind schedule to address the next generation of the world's most innovative young leaders: He will serve as MIT's 140th Commencement speaker on Friday, June 9, in Killian Court.

Bernanke's "career has exemplified values that are central to MIT -- personal integrity, analytical rigor, an uncompromising drive toward excellence and a commitment to public service -- and I can think of no one who can better inspire our new graduates to use their talents to serve the nation and the world," said MIT President Susan Hockfield when the Commencement speaker was announced.

Eric Grimson, head of the Department of Electrical Engineering and Computer Science, and chair of the 2006 Commencement Committee, said Bernanke provides a "wonderful role model to our current students, demonstrating that graduates from MIT can have influential roles outside of the technical arena."

Bernanke was visiting professor of economics at MIT in 1989. He has also been an associate professor of economics at Stanford and he served as a professor and department chair of economics at Princeton from 1996 to 2002.

Bernanke has developed a reputation for challenging conventional thinking, particularly about the transparency and communicativeness of the Fed, which some have regarded as an opaque institution.

For example, Bernanke advocates inflation targeting, a practice in which the central bank sets an explicit goal for inflation and is then held accountable for meeting that goal. The Fed's decision this year to begin providing two-year inflation forecasts has been credited to Bernanke's influence on the Board of Governors.

Bernanke's interest in helping the public understand and predict economic changes through Fed policies is reflected in his 2000 book, "Essays on the Great Depression," which examines America's devastating economic collapse of the 1930s. The lessons from that decade, Bernanke has said, include the urgent role of financial stability in maintaining social and political stability and the importance of international economic cooperation.

Young economists will be glad to learn Bernanke sees an important role for academic research in sharpening Fed policies.

"Economics is like trying to learn how to repair a car with the engine running. It's always changing. Having good economists to interpret data and present policy alternatives has a beneficial effect on policymaking. And good economic policy makes a very big difference to the welfare of the average person," he said.

Bernanke and his wife, Anna, have two children.

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