It was clear Tuesday’s class on the Federal Reserve was anything but just another lecture.
There were clues. Students, many in button-downs or nice blouses, showed up half an hour early. A gaggle of reporters, eight cameras, stage lights and security detail dotted the room.
Then the chairman of the Federal Reserve showed up at the door in Duquès Hall. Students, meet your visiting professor.
As part of the seven-week course “Reflections of the Federal Reserve and its Place in Today’s Economy,” 30 GW students—and anyone watching via a live feed—have the opportunity to hear four lectures from Ben Bernanke. Dr. Bernanke will deliver another lecture today, then again on March 27 and 29.
“Gee, this is great. This is what I used to do until I got into this line of work,” Dr. Bernanke opened on Tuesday, referring to his time as a professor at Princeton and Stanford universities. “I’ve always enjoyed engaging with college students.”
With the help of a 50-slide Power Point presentation, Dr. Bernanke’s hour-long lecture started with the basics: A look at the mission of central banks (maintaining economic and financial stability) and how they achieve it (adjusting interest rates and helping to calm potential financial panics, to name a couple ways), along with the start of the Federal Reserve in 1913 and its earliest challenges.
“Central banks are very important institutions,” Dr. Bernanke told the students. “They have helped to guide the development of modern financial systems, modern monetary systems and they play a major role in economic policy.”
Weaving examples and jokes throughout his lecture, Dr. Bernanke also described the pitfalls of a gold standard, an alternative to a central bank where the value of currency is fixed with a quantity of gold. It lacks flexibility in changing economic times, Dr. Bernanke said. And there’s also the practical problem: “I mean, what you have to do to have a gold standard is you have to go to South Africa or some place and dig up tons of gold and move it to New York,” Dr. Bernanke said. That means gold is “dug up and put back into another hole,” he said to laughter.
Tuesday’s lecture reached only as far as the Great Depression, which Dr. Bernanke described as the Federal Reserve’s first major challenge—and first major failure. The Federal Reserve didn’t use its policy power to prevent deflation, and it didn’t sufficiently lend money to needy banks to avert a panic, he said. That lesson will be relevant when Dr. Bernanke addresses the most recent economic crisis in one of his upcoming lectures, he said.
Students were impressed following the class—which was the first time any sitting chairman has participated in a lecture series at a university.
“This is a dream,” said Jonathan Cohen, a senior finance major and economics minor in the School of Business, adding he was struck most by Dr. Bernanke’s teaching ability.
“When you’re at the top of your game, when you’re the smartest in your industry, you can dumb things down to the simplest terms. I thought he did that in an amazing way,” Mr. Cohen said. And Dr. Bernanke’s jokes kept him and his classmates engaged, he added. “It was really great.”
Students like Mr. Cohen have an added incentive to do well, said Professor Tim Fort, chair of the Department of Strategic Management and Public Policy and lead instructor of the class. Though Dr. Bernanke was firm about the fact that he would not be grading any papers, he agreed to read a few of the best ones. That’s a chance, Dr. Fort said, for students to influence the country’s monetary policy.
“There’s great opportunity for you to make an impression and have your name remembered,” he said.
The broader public also benefits from the lecture series, GW President Steven Knapp said in his introduction.
“I think it provides an extraordinary opportunity for the students who are here in the classroom, but also for those watching online, that they have an opportunity to gain insight into the nation’s central banking system and a wide range of issues that affect this country and the world.”