By Barbara A. Preston | Posted October 27, 2022
Nobel Prize Winner Ben S. Bernanke, 68, former chairman of the Federal Reserve, lived in Rocky Hill and served two terms (six years) as a member of the Montgomery Township Board of Education.
The Royal Swedish Academy of Sciences announced on October 10 that the Nobel Prize in Economic Sciences will be shared by Bernanke “for research on banks and financial crises.” Bernanke is now a senior fellow at The Brookings Institution in Washington DC.
He shares the prize with Douglas Diamond and Philip Dybvig, for their joint discoveries that “have significantly improved our understanding of the role of banks in the economy, particularly during financial crises. An important finding in their research is why avoiding bank collapses is vital.”
A colleague once gave a speech on how Bernanke’s school board experience was a key to his success. “I think the best thing that ever happened to Ben – Chairman Bernanke – is he served on the school board. And I’m very serious about that .... What allows him to run a meeting the way he does, with harmony and results, I think, was that training on the school board.”
The colleague, Richard Fisher, president and chief executive of the Federal Reserve Bank of Dallas, gave the speech in which he cited Bernanke in 2008. Fisher added: “I ran for the United States Senate. I’ve negotiated with the U.S. Congress on behalf of the president – twice. That’s a piece of cake compared to being on a school board.”
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Bernanki and his wife Anna, a schoolteacher, have two children, Joel and Alyssa, who attended Montgomery High School. Bernanke was born in December 1953 in Augusta, Georgia, and grew up in Dillon, South Carolina. He received a bachelor’s degree in economics in 1975 from Harvard University and a Ph.D. in economics in 1979 from the Massachusetts Institute of Technology.
The Royal Swedish Academy gave the following summary of the importance the new Nobel laureates work: “For the economy to function, savings must be channeled to investments. However, there is a conflict here: savers want instant access to their money in case of unexpected outlays, while businesses and homeowners need to know they will not be forced to repay their loans prematurely.
“Bernanke analyzed the Great Depression of the 1930s, the worst economic crisis in modern history. Among other things, he showed how bank runs were a decisive factor in the crisis becoming so deep and prolonged. “When the banks collapsed, valuable information about borrowers was lost and could not be recreated quickly. Society’s ability to channel savings to productive investments was thus severely diminished.”
Ten million Swedish kronor, the equivalent of $910,780, will be shared equally between the laureates.
