Ben Bernanke Begins
GW Lectures
The chairman of the Federal Reserve covered the early
development of the central bank in his first of four classes
March
22, 2012
The George Washington University's School of Business hosts Ben S. Bernanke, chairman of the Board of Governors of the Federal Reserve System, as guest lecturer for an undergraduate School of Business class entitled "The Federal Reserve and Its Role in Today's Economy."
It
was clear Tuesday’s class on the Federal Reserve was anything but just another
lecture.
There
were clues. Students, many in button-downs or nice blouses, showed up half an
hour early. A gaggle of reporters, eight cameras, stage lights and security
detail dotted the room.
Then
the chairman of the Federal Reserve showed up at the door in Duquès Hall.
Students, meet your visiting professor.
As
part of the seven-week course “Reflections of the Federal Reserve
and its Place in Today’s Economy,” 30 GW students—and anyone watching via a live feed—have the opportunity to hear four lectures from Ben
Bernanke. Dr. Bernanke will deliver another lecture today, then again on March
27 and 29.
“Gee,
this is great. This is what I used to do until I got into this line of work,”
Dr. Bernanke opened on Tuesday, referring to his time as a professor at
Princeton and Stanford universities. “I’ve always enjoyed engaging with college
students.”
With
the help of a 50-slide Power Point presentation, Dr. Bernanke’s hour-long
lecture started with the basics: A look at the mission of central banks
(maintaining economic and financial stability) and how they achieve it
(adjusting interest rates and helping to calm potential financial panics, to
name a couple ways), along with the start of the Federal Reserve in 1913 and
its earliest challenges.
“Central
banks are very important institutions,” Dr. Bernanke told the students. “They
have helped to guide the development of modern financial systems, modern
monetary systems and they play a major role in economic policy.”
Weaving
examples and jokes throughout his lecture, Dr. Bernanke also described the
pitfalls of a gold standard, an alternative to a central bank where the value
of currency is fixed with a quantity of gold. It lacks flexibility in changing
economic times, Dr. Bernanke said. And there’s also the practical problem: “I
mean, what you have to do to have a gold standard is you have to go to South
Africa or some place and dig up tons of gold and move it to New York,” Dr.
Bernanke said. That means gold is “dug up and put back into another hole,” he
said to laughter.
Tuesday’s lecture reached only
as far as the Great Depression, which Dr. Bernanke described as the Federal
Reserve’s first major challenge—and first major failure. The Federal Reserve
didn’t use its policy power to prevent deflation, and it didn’t sufficiently
lend money to needy banks to avert a panic, he said. That lesson will be
relevant when Dr. Bernanke addresses the most recent economic crisis in one of
his upcoming lectures, he said.
Students were impressed
following the class—which was the first time any sitting chairman has
participated in a lecture series at a university.
“This is a dream,” said
Jonathan Cohen, a senior finance major and economics minor in the School of
Business, adding he was struck most by Dr. Bernanke’s teaching ability.
“When you’re at the top of your
game, when you’re the smartest in your industry, you can dumb things down to
the simplest terms. I thought he did that in an amazing way,” Mr. Cohen said.
And Dr. Bernanke’s jokes kept him and his classmates engaged, he added. “It was
really great.”
Students like Mr. Cohen have an
added incentive to do well, said Professor Tim Fort, chair of the Department of
Strategic Management and Public Policy and lead instructor of the class. Though
Dr. Bernanke was firm about the fact that he would not be grading any papers,
he agreed to read a few of the best ones. That’s a chance, Dr. Fort said, for
students to influence the country’s monetary policy.
“There’s
great opportunity for you to make an impression and have your name remembered,”
he said.
The
broader public also benefits from the lecture series, GW President Steven Knapp
said in his introduction.
“I
think it provides an extraordinary opportunity for the students who are here in
the classroom, but also for those watching online, that they have an
opportunity to gain insight into the nation’s central banking system and a wide
range of issues that affect this country and the world.”
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