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Their work is highly suspect from the view of economic theory and is derived from the point of view of history and the social sciences. They neglect the overall situation they are trying to explain, the role of institutions, and the basics of government intervention. For example, Bernanke’s work does not explain why the “situation” occurred in the first place, what the government did from the outset, or how it could be prevented in the future, except for ever-increasing government and Fed intervention.

https://mises.org/wire/ben-bernankes-nobel-prize-committee-rewards-arsonist-claiming-fight-fire-he-started

Mark Thornton

Along with Douglas Diamond and Philip Dybvig, Ben Bernanke was awarded the Nobel Prize in Economics today. The three have written extensively on the need to bail out the banks in times when the economy is in corrective mode, generally after a long period of monetary injections. Bernanke was Chairman of the Federal Reserve when he pushed for the latest round of bank bailouts in 2007-2009.

Bernanke’s research concentrated on the Great Depression and argued that the banks needed to be bailed out in the 1930s in response to the collapse of the stock market and the severe correction in the US economy. Diamond and Dybvig have also written on the implications of bank failures on the US economy. All three have latched onto the idea that banks take in deposits which are redeemable short term, but they make loans that are longer term and are thus susceptible to bank runs.

Their work is highly suspect from the view of economic theory and is derived from the point of view of history and the social sciences. They neglect the overall situation they are trying to explain, the role of institutions, and the basics of government intervention. For example, Bernanke’s work does not explain why the “situation” occurred in the first place, what the government did from the outset, or how it could be prevented in the future, except for ever-increasing government and Fed intervention.

Their research amounts to little more than an excuse to bail out the banks. Therefore, if you are a member of the privileged financial elites, the Housing Bubble and the ensuing Financial Crisis was an unmixed blessing. You made big money all throughout the housing and stock market bubbles and then your banks received several bailouts and special privileges during the bust, including borrowing at zero interest rates on loans, capital infusions, Quantitative Easing 1 & 2, and interest payments on “excess reserves.”

Of course, most importantly, you had your man in charge of the Federal Reserve, the man who literally “wrote the book” and dissertation, on how the Fed must bailout the banks in times of economic trouble. No matter how badly everyone else fared, you could depend on Bernanke to bailout the banks, whatever the costs to others.

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