Bernanke, who chaired the Fed between 2006 and 2014, is most remembered today by the decisions he made in the 2008 financial crisis. During this period, Bernanke pulled the interest rate of more than 5% to zero and surprised many people, injecting more than 1 trillion dollars into the economy between 2008-2010.
While the coronavirus outbreak is spreading rapidly all over the world, there is a sharp decline in the global markets and the global economy continues to be adversely affected. In his statements to the Squawk Box program, Bernanke not only evaluated the recent events of the coronavirus outbreak, but also compared the current economic developments with some of the past crises.
Economic Recession Is Coming
The USA and many other countries have started to take various measures to prevent the coronavirus epidemic. While some countries impose various restrictions on social life, countries such as India have declared a curfew directly.
In this process, many workers and business owners started to hurt. Employees and employers who are unable to go to work, lose their jobs due to the epidemic and whose customers are reduced due to the epidemic are going through a very difficult process. In the light of all this, Bernanke thinks that the economic recession is almost saying “I am coming”:
“In the next quarter, we can see a very harsh and hopeful recession, because naturally everything is closing. If workers and employers are not heavily affected by this process, we can see that the economy has risen up again in a short time. ”
Not Like Others
Ben Bernanke told the Squawk Box program that the current economic developments are neither like the Great Depression in 1929 nor the 2008 financial crisis. Comparing the economic effects of the coronavirus to the period of the Great Depression, Bernanke says:
“This is something very different from the Great Depression. The Great Depression was largely due to human problems, monetary and financial shocks. We are now seeing a panic air similar to that of the Great Depression, a volatility similar to it. But what happened recently seems like a snow storm, a natural disaster rather than the Great Depression. ”
Bernanke thinks that the recession this time was different from the financial crisis in 2008. The reason he thinks so is the same as in the Great Depression. Reminding that the financial crisis in 2008 was largely based on human foundations, Bernanke thinks that the economic recession triggered by the coronavirus is much different from these crises.