When I was in RBI (2008-13), I used to take wagers with my colleagues on the possibility of Ben Bernanke winning the economics Nobel sometime down the line. Most thought it was unlikely that any central bank governor associated with the Global Financial Crisis (GFC) of 2008-09, least of all the chairman of the US Federal Reserve, would pass the bar.
They had a point. US policymakers of that time were blindsided by the financial instability brewing in the underbelly of the system. Bernanke himself was remarkably sanguine when he deposed before the Congress in early 2007: “Our assessment is that there’s not much indication at this point that subprime mortgage issues have spread into the broader mortgage market, which still seems to be healthy.”
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Views expressed above are the author’s own.
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