The Courage to Act by Ben Bernanke

I really enjoyed learning from this book because it was a lot of, here’s what we did and now here is why we did that. I thought that it was a great time to read this book as many have been saying for the past few years that a market reset should be expected in the near future. Most of this book was very educational for me as I did not have much of a background about the way the Federal Reserve is run nor did I have much background information about the recession.

The first thing that I noted was the people that comprise the Federal Reserve Board. It was interesting to learn that they are all appointed by the president. It was very cool to learn that a new member is elected every other year, as the author shared, that is a good way to ensure that there is consistently fresh thinking as well as consistent positioning.

There are 7 members of the Federal Reserve Board that are appointed by the president and confirmed by the senate for standard 14 year terms. A new member is elected every other year.

Because the Fed oversees the banks in the United States, I liked hearing of the two main objectives for doing so. I think that the goals are good but am curious how much that regulation and supervision truly does to accomplish the intended objectives.

Bank regulation and supervision:

1. Ensures banks are financially sound
2. Protects the consumer

As a numbers-oriented person, I could see how this would be the case. Someone I met who’s going to be a coach of a semi-pro football team in the area used to be part of the military. He oversaw all people in the northeast who went abroad to Iraq. When he started, nearly 4% of all people who went overseas didn’t return alive. By the end of his tenure, he got that number down to less than 1%. This gentleman is a great example of never forgetting the people behind the numbers.

Never forget the people behind the numbers.

There was a very delicate balance that the author shared between price stability and maximum employment. I think that it’s very interesting now that I know this when observing the various changes that the Fed is making.

Price stability and maximum employment:

When inflation is too high, it then calls for tighter monetary policy.

When unemployment is too high, it then calls for easier monetary policy.

The last thing I bookmarked was one of the last things in the book. I think that it was a very good point and something that is essential for all of us. The author closes by saying the following,

“We need more cooperation and less confrontation in Washington. We must restore calumny, compromise and openness to evidence.”

Photo by Philipp Berndt on Unsplash

I look forward to seeing how the approach is similar or different from the past in the coming years when the next downturn takes place. Openness is one of my favorite points that Ben includes in this book. Especially as I watched some of the democratic debates recently, most people seemed to converse in a divisive manner rather than one that encourages openness and understanding before being understood.

I gave this book a 3.5/5

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