Saturday, November 21, 2015

Bernanke On Wall Street Week - "I Don't Get This Inequality Thing" - Learns Academics And The Real World Are Dramatically Different [VIDEO]

On November 15th Wall Street Week released a pre-recording and edited interview with Ben Bernanke.  The comments and interview itself started out very generic as expected.   As the interview carried on though Dr. Bernanke's comments loosened up and became very revealing and at times comical.  When it comes to Income Inequality he says "I don't get it".  He seems shocked at one point about Richard Fischer's belief in his empathy toward the American people. As for how he wants to be remembered he says "for making the Fed more transparent."

The interview starts out about his past, where he grew up, what his family is like, how he meet his wife, etc.  About 8 minutes in the interview gets its momentum.

8:19 The Crisis and Bernanke's POV:
  • He first became aware home prices were falling and sub-prime losses were mounting in 2006 (*RutRho notes it was in July 2005 he told Maria on CNBC that he didn't "buy her premise.")
  • Says he had "great intelligence" coming from executives he was talking with circa 2007 and follows up with: "even people on Wall Street didn't have that clear a vision of what was going on." - real solid intel there Chachi.

12:53 Contrasts today's Fed versus 1913's Fed:
  • Talking about simpler times and why the Fed was created he says "in the old days it would have just been the banks and depositors pulling their money out of banks."  He's referencing the bank runs and general banking crisis in a more direct economy between depositors and banks.  Fast forward to today where we have structured finance and more diverse financial infrastructure where depositor risk is branching out into "...securities dealers, money market funds, commercial paper."  
  • 13:35 He defends focusing on commercial paper because "ultimately we're a public institution and we wanted to help protect the economy."  Also because somehow focusing on commercial paper was the way to protect the American people. 
  • 14:41 "...we want investors to make decisions based on the merits of the investment and not thinking 'well the Fed is going to help me when we have some sort of problem.'"
15:34 Lessons learned by "Mister Zero":

16:23 Scaramucci "Richard Fischer says your very empathetic of the American people" to which Bernanke smiles and says "well that's interesting".

19:43 He comments on the realization that academics and their world of Unicorns, EMH, and Broken Windows have no place in the real world where every word matters when it comes to talking about markets.

The rest of the video is for you to discover, around 21:50 he makes his income inequality remarks.

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