In the early morning of June 16, Beijing time, the Federal Reserve raised its benchmark interest rate by 75 basis points to 1.50% in the 1.75% range, the biggest increase since 1994.

'inflation expectations are rising, so aggressive action is needed this time, 'Mr. Powell said at a regular news conference. The Fed needs to take pre-emptive action so that it has more options after that, and the next interest rate decision is expected to "choose between a 50 basis point hike and a 75 basis point hike".

On the current state of the US economy, the Fed said in a statement that job growth has been strong in recent months and the unemployment rate has remained low. Inflation remains high, reflecting the imbalance between supply and demand associated with the epidemic, rising energy prices and broader price pressures.

The global economy is entering a very turbulent stage of development, and the COVID-19 epidemic has objectively accelerated the transformation of this growth paradigm.

The transformation of the economic growth model in the midst of turbulence will undoubtedly confuse the market entities who have become accustomed to the original growth model. The characteristics of the new growth model are not clear at first, and in many cases are still wavering.

For example, at the current level of high inflation,Is it just a short-term phenomenon, or will it become a long-term feature of the new growth model?

De-globalization is mainly in the high-tech field, or will it gradually extend to finance, trade and other fields, thus forcing the supply chain to rearrange at a higher cost around the world?

Whether it is to better understand the economic and financial reality, or to promote financial theoretical thinking, reading financial classics is an inevitable link.

Classic works often have the unique value of traveling through time and space, and can inspire us to think in different market environments, even if the times change, perhaps a specific conclusion is no longer applicable, but the problems revealed and the research methods used are often new and enlightening.

Smart investors have been authorized by CITIC Publishing Group to share with you this preface to Mr. Ba Shusong's recommendation for Bernanke on the Great Depression. May it be beneficial to open a book!

BA Shusong: the inspiration of passing through HistoryWhy did the Great Depression becomeThe Holy Grail of Macroeconomic Research

The turbulence from the front line of the international financial market often leads to disputes in the financial theoretical circle.

The Great Depression of the United States in the 1920s and 1930s was the continuation of modern society.One of the longest economic depressionsAt that time, it not only led to long-term mass unemployment in the United States and Western society (13.7 million in the United States, 5.6 million in Germany and 2.8 million in Britain, according to 1932 data), but the rapid deterioration of the economic situation also changed social relations. affected the whole world situation, and eventually led to the outbreak of World War II.

In the field of economics, the research results of the Great Depression shook the leading position of classical economics in the western government decision-making at that time, various countries strengthened the government's intervention in the economy, and Keynesianism became very popular. modern macroeconomics has since become an independent discipline.

The remarkable turbulence and disputes in the real world will prompt people to reflect on it in theory. It is in this sense that some classic works and representative scholars will be frequently mentioned in the period of great change or when a similar situation occurs.

In the field of crisis research, in the 1920s and 1930sThe Great Depression in the United States is probably the one with the most research and the most divergent conclusions in the field of economics. Up to now, there is still no consensus among economists on the Great Depression.

Friedman, the representative of the monetarism school, proposed in his book "American Monetary History: 1867Mew 1960" that the Federal Reserve's monetary tightening policy led to the disaster of the Great Depression at that time, and the corresponding response should naturally be to expand the money supply.

Rothbard, an Austrian scholar, believes that the Great Depression was caused by excessive government intervention in the economy. He believes that the central bank's intervention in the financial and monetary fields in violation of the gold standard is very disadvantageous to the long-term development of the economy.

The Nomura Comprehensive Research Institute in Japan explained the Great Depression in the United States from the perspective of balance sheet recession in combination with the Japanese recession in 1990.

Equally noteworthy of the analysis of the crisis is Bernanke's Bernanke on the Great Depression: recession and recovery.

From "fans of the Great Depression" to policy enforcers dealing with the subprime crisis

Bernanke is well known by international China Finance Online Co Ltd. One of the important reasons is that he takes the place of GE.Lin Span became chairman of the Federal Reserve and became a direct decision maker and policy implementer in response to the US subprime mortgage crisis during his term of office.

Bernanke was born in 1953. He graduated Magna cum laude in Economics from Harvard University in 1975 and entered the Massachusetts Institute of Technology, where he received his doctorate in 1979.

Bernanke then joined the faculty, teaching at Stanford for six years (1979-1985), as a professor of economics and political affairs at Princeton University from 1985 to 2002, and as head of the economics department.

Since 1987, Bernanke has been involved in the Fed's work in different ways. First, he became a visiting scholar of the Federal Reserve, and served at the Federal Reserve Bank of Philadelphia, the Federal Reserve Bank of Boston and the Federal Reserve Bank of New York from 1987 to 1996.

In 2002, he left Princeton to become a governor of the Federal Reserve. Bernanke served as chairman of the President's Council of Economic Advisers in 2005 and succeeded Alan Greenspan as chairman of the Federal Reserve in February 2006 until 2014.

During his tenure as chairman of the Federal Reserve, he was involved in dealing with the 2008 financial crisis and was named time magazine's person of the year in 2009. After leaving office in 2014, he joined the Brookings Institution, focusing on economic recovery policies.

From Bernanke's experience, we can see that he has experienced a process from a scholar to a policy practitioner and then to academia. This is closely related to his research field and interest.

During his PhD, Bernanke's most interesting research project was the Great Depression in the 1920s and 1930s.He was fascinated by the causes and effects of the Great Depression and thought of himself as a "Great Depression fan".

And during his teaching at Stanford University, the United States experienced another severe recession, which can be said to be quite severe after the Great Depression.

Paul Volcker, then chairman of the Federal Reserve, used strict monetary policy to keep the US economy from being engulfed by inflation. This further prompted Bernanke to continue to study the Great Depression and monetary policy.

The Great Depression of the 1920s and 1930s had a profound impact on Bernanke. Bernanke stressed at the end of a speech:

He believes that the Fed made a mistake in the 1930s, and he will try his best to avoid repeating the same mistakes.

After the financial crisis in the United States in 2008, he decisively took a series of strong measures to turn the tide. The usual market view is thatIt is because Bernanke was taught by the Great DepressionTraining, took more effective policy measures, so that the 2008 U. S. financial crisis did not get into more trouble.

Research methods that pay attention to the combination of logic, history and data

Bernanke's study of the Great Depression absorbed part of Friedman's research.，For example, his perception of the positioning of the central bank and the judgment that monetary contraction led to the Great Depression can be said to come partly from Friedman in theoretical logic.

From Bernanke's research, we can see that Friedman's "American Monetary History: 1867MAI60" has a profound impact on Bernanke.

But Bernanke made a new exposition on the impact of the gold standard in the Great Depression, arguing thatThe gold standard limits the exertion of monetary policy, and allowing the gold standard to exist will make monetary policy exist in name only.

He pointed out thatThe gold standard led to the severity of the Great Depression in the United StatesThe main cause of the evolution to the global crisis.

In the early 1930s, the monetary contraction in the United States and France was transmitted to the whole world through the international gold standard, which led to global deflation, which led to the shrinkage of borrowers' financial positions and debt deflation. Lead to huge losses and even bankruptcy liquidation of borrowers, resulting in depression.

He not only discussed this view many times in his papers, but also criticized the gold standard in a series of speeches he gave to students at George Washington University in 2012 about the role of the central bank.

Bernanke wrote a series of articles about the Great Depression, which later concludedThe integrated book is Bernanke's on the Great Depression: recession and recovery.

These papers analyze the causes and transmission mechanism of the Great Depression. Bernanke pays attention to the comparison between countries, especially the policies of different countries adhering to the gold standard and abandoning the gold standard.

In his book, he uses a large amount of data and information from many countries, including economic data, wages, employment, and so on, from different angles of total supply, aggregate demand, nominal wages, and so on. It is pointed out that the Great Depression in the United States is a global depression caused by multiple factors. To understand the whole event, we need to consider the entire international system.

This is the policy mistake made by the United States and other countries.The key factors that led to or deepened the Great Depression.The Federal Reserve, in particular, failed to actively use monetary policy to prevent deflation and recession when dealing with the challenges of the first crisis, so it failed to perform the function of maintaining economic stability.

同Similarly, the Fed did not perform its lender of last resort function very well.Which led to the failure of many American banks and led to a contraction in the credit and money supply.

Bernanke pointed out that these studies of the Great Depression are important experiences and lessons for later generations. So when he later acted as chairman of the Federal Reserve to deal with the subprime crisis in 2008, he remembered these policy lessons from American history and generally avoided the same mistakes, strengthening the credibility of a series of policies formulated by the Federal Reserve.

Bernanke has described the structure of the book in detail in his preface, so I won't repeat it here.

I would like to take this opportunity to talk about why we are still reading Bernanke's book today, or why we are going to read another book that studies the Great Depression of 1929.

The inspiration of passing through history

In the preface to the book, Bernanke said: some people think that the Great Depression of the 1930s is a thing of the past, and that this dusty history has little to do with the economy of the information age in the 21st century.

Those who hold these views can take a look at the current economic headlines:High unemployment, bank failuresFinancial market turmoil, currency crisis, high inflation, war conflict. All of this may be caused by the Great Depression.

It should be said that today, the lessons of the Great Depression in the United States still have a strong warning to the world today.It means something.

This is one of the important reasons why we should read this book.How to avoid the same mistakes in the field of economic policy? It is one of the feasible solutions to seek enlightenment from similar historical events.

Like a series of policy initiatives adopted by Bernanke during the 2008 US financial crisis, many of them learned the lessons of the Great Depression.

History does not repeat itself, but it is always strikingly similar.It is of great practical significance to review the world economy and pattern during the Great Depression today.

The bursting of the stock market bubble and a series of bank panic in 1929-1933 share the same characteristics as the global financial tsunami that broke out in 2008.

At present, the economy is larger, the products are more complex, the transaction is more convenient, and the countries are connected.Under closer circumstances, problems such as the abuse of technology, the reshuffle of the international pattern, the lack of supervision, and the serious lack of international policy coordination will also become more prominent.

The study of the connections and responses of various economic institutions in various economies during the Great Depression also helps us to understand the logic behind transaction costs, market opportunities, resource allocation and so on in the entire huge world economic system. in order to find a better way to deal with the current global economic downturn.