Chapters yet to be written on the Bernanke legend

Early into his first term as the chairman of the US Federal Reserve, Ben Bernanke is said to have asked his staff to prepare a crisis manual. Like the operating instructions that come with most equipment, this document detailed every major crisis the Fed faced since its creation, the responses and the results.

The idea was to develop a set of standard responses to any defined economic or financial crisis, to make the Fed's role more technical than political. He also asked for bi-annual financial stability reports on the health of the financial markets and the major institutions, or those which were too big to fail.

It is not clear if the financial stability reports were still being written as the world plunged into the worst economic crisis since the Great Depression, and if indeed they were, they would have made very interesting reading.

But, Ben Bernanke definitely did not need a crisis manual to tell him how to respond as the Fed chairman to a credit crisis that threatened to push the world economy into Great Depression II. In a way, he had prepared most of his adult life for that role.

As a student, he had extensively researched the causes of the Great Depression and especially the Fed's role in worsening the decline. By the time he became a professor at Princeton, he was the foremost authority on the most horrifying episode in economic history.

Bernanke went on to write Essays on the Great Depression, the definitive account of the Depression and its causes. When asked why he chose to study the Depression, Bernanke is said to have replied, "If you want to understand economics, study the biggest calamity to hit the US and world economies."