The Nobel Prize in Economics awarded on Monday is rather a small surprise.
The media speak incorrectly of the Nobel Prize in economics. In reality, this prestigious prize is distributed by the bank of Sweden, because during his lifetime Alfred Nobel had not planned a Nobel in economics. The little story says that it was because his wife had had an affair with an economist…
But let’s get back to the prize that was awarded, not to one person, but to three, including Ben Bernanke, economist, but also former president of the American central bank between 2006 and 2014. That’s what surprises this year. The economics prize was awarded to 3 researchers known for their work on banking crises, including a former central banker. Ben Bernanke, for example, studied how the massive withdrawals of money from banks by savers had aggravated the crisis of the 1930s.
The two other economists who will receive this prize at the same time as him have developed economic models showing the fragility of banks in the face of rumours. Clearly, any doubt about the solvency of a bank leads to the massive withdrawal of deposits in this same bank.
Finally, this presentation of the Nobel Prize in Economics concerns us all, because today the role of central banks is, it goes without saying… central! They must curb and then break inflation, but without too much harming economic growth. The most optimistic will say that this Nobel Prize in Economics is also a consecration of Ben Bernanke, because he was at the helm of the American central bank when the subprime crisis broke out in 2008. In other words, we all had the chance to to have a man who had studied the banking crisis of 1929 well and who was therefore able to take the right steps in 2008 and the following years to save us from shipwreck. Yes, except we don’t have to applaud either. Because today, with hindsight, other economists also recognize that Ben Bernanke by wanting our good caused our loss. By reducing interest rates to 0% and opening wide the floodgates to finance public debt, he prevented natural adjustment mechanisms from occurring. Following that, we witnessed a gigantic bubble in the stock market and in real estate. Clearly, it is this same Nobel Prize in economics that is also the source of our concerns today.
As Geert Noels, a well-known Flemish economist in the north of the country, points out, this raises questions about the relevance of this Nobel Prize. For my part, the only thing to keep in mind is that this Nobel Prize will have at least one use: to show that the health of banks is important. The question arises today with great acuity, because the general public does not know it, but what scares bankers today is Credit Suisse. A Swiss bank whose bankruptcy is simply feared, because its share price has fallen by 60% since the beginning of the year. And Credit Suisse is 5 times the size of the Lehman Brothers bank in 2007. As my friends from the TTSO newsletter say, “yes, it’s worth taking an interest in the Nobel Prize this year. economy” .
The media speak incorrectly of the Nobel Prize in economics. In reality, this prestigious prize is distributed by the bank of Sweden, because during his lifetime Alfred Nobel had not planned a Nobel in economics. The little story says that it was because his wife had had an affair with an economist… But let’s go back to the prize which was awarded, not to one person, but to three, including Ben Bernanke, economist, but also a former president of the American central bank between 2006 and 2014. That’s what surprises this year. The economics prize was awarded to 3 researchers known for their work on banking crises, including a former central banker. Ben Bernanke, for example, studied how the massive withdrawals of money from the banks by savers had aggravated the crisis of the 1930s. The two other economists who will receive this prize at the same time as him have developed economic models showing the fragility banks in the face of rumours. Clearly, any doubt about the solvency of a bank leads to the massive withdrawal of deposits in this same bank. In the end, this presentation of the Nobel Prize in Economics concerns us all, because today the role of central banks is, it is the case to say… central! They must curb and then break inflation, but without too much harming economic growth. The most optimistic will say that this Nobel Prize in Economics is also a consecration of Ben Bernanke, because he was at the helm of the American central bank when the subprime crisis broke out in 2008. In other words, we all had the chance to to have a man who had studied the banking crisis of 1929 well and who was therefore able to take the right steps in 2008 and the following years to save us from shipwreck. Yes, except we don’t have to applaud either. Because today, with hindsight, other economists also recognize that Ben Bernanke by wanting our good caused our loss. By reducing interest rates to 0% and opening wide the floodgates to finance public debt, he prevented natural adjustment mechanisms from occurring. Following that, we witnessed a gigantic bubble in the stock market and in real estate. Clearly, it is this same Nobel Prize in economics that is also the source of our concerns today. As Geert Noels, a well-known Flemish economist in the north of the country, points out, this raises questions about the relevance of this Nobel Prize. For my part, the only thing to keep in mind is that this Nobel Prize will have at least one use: to show that the health of banks is important. The question arises today with great acuity, because the general public does not know it, but what scares bankers today is Credit Suisse. A Swiss bank whose bankruptcy is simply feared, because its share price has fallen by 60% since the beginning of the year. And Credit Suisse is 5 times the size of the Lehman Brothers bank in 2007. As my friends from the TTSO newsletter say, “yes, it’s worth taking an interest in the Nobel Prize this year. economy” .
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