Audio-book Review
By Chet Yarbrough

Website: chetyarbrough.com

The Courage to Act: A Memoir of a Crisis and Its Aftermath

Written by: Ben S. Bernanke

Narrated by: Grover Gardner


Politics and administration is a marriage of necessity.  Ben Bernanke writes a “nuts and bolts version” of the role of the Federal Reserve in the United States during the economic crises of 2007-2008, a crisis that continues to plague the world.

Bernanke is the chairman of the Federal Reserve during the near collapse of the world economy.  The story Bernanke tells is consistent with most details revealed by Tim Geithner and Henry Paulson (the former Department of the Treasury Secretaries) during the worst part of the 2007-2008 global financial crises.


What Bernanke adds to Paulson’s and Geithner’s version of events is a more transparent understanding of how American politics and administration dealt with the greatest economic crises since 1929. These three managers, along with elected officials and other public administrators, cussed, discussed, agreed, and disagreed on actions taken to stabilize the American economy.

————-BREAD LINES IN NEW YORK 1933————-

Without a level of cooperation between politics and public administration, it is entirely possible America would be in the middle of its second great depression.

The mortgage crises of 2007-2008 is a “Black Swan” event in American history.  A “Black Swan” is a metaphor for an event that is generally unforeseen that changes the direction of history.

The packaging of real estate and home mortgages of varying levels of security leads to the mistaken belief that housing and commercial land prices will always increase as the economy expands.  This false belief led to sales throughout the world of figurative IEDs (Improvised Explosive Devices”) that bankrupted individuals, corporations, and Nation-State economies.  The shock waves of these instruments of economic mass destruction continue to impact the world economy.

QUANTS (Computer whizzes who used algorithms to combine assets for mortgage-backed securities that contributed  to the world economic crises of 2007/2008)

With the advent of computer technology, combined assets became so complex that individual human judgement of value became clouded.  With each individual asset added to a conglomeration of houses, property, and/or stocks, value changed.  The change was meant to spread risk and increase financial stability of combined assets.  However, as similarity of combined assets accumulated, the created aggregate became more (rather than less) vulnerable to market change.

RATING AGENCIES (Organizations that rate mortgage backed and other investment securities.)

The rising risk of these combined securities is compounded by “independent” rating agencies.  If vulnerabilities are not clearly understood, sellers of these security conglomerations rely on ratings from analysts that underestimate volatility.

This “so-called” independent rating system fails investors because both sellers and buyers are incentivized to buy and sell a security that is not clearly understood.  When one of the derivative assets begins to lose value; particularly if the asset is related (like land and vertical construction) all assets in the packaged security are infected by loss of value.

Rating companies lose their objectivity.  They may be incentivized by the same companies they are evaluating; and/or are paid for report productivity rather than quality of investigation. Greed seduces both buyer and seller.

Though this explanation of derivatives is too simply described in this review, it is inferred in Bernanke’s, Paulson’s, and Geithner’s books to have been a contributory cause for the loss of trillions of dollars in the world economy.What makes Bernanke’s book interesting is his explanation of how politics and public administration worked together to right America’s sinking economic ship-of-state.  Even today, recovery is not complete but the ship did not sink.  “Working together” is a qualified description of what happened based on Bernanke’s view.  There were bitter disagreements among elected and administrative agents that could only be resolved with an appreciation and exercise of politics.

Politics have become synonymous with lying and misrepresentation in the modern world.  Some say President Trump exemplifies that belief.


Not to defend Trump, but his election is a consequence of ignoring the importance of politics in determining what is right and wrong in America’s democracy.  Democrats were not listening to middle class America.  Politics in a democracy represent the will of people who are being governed.  Without politics, the best intentions of administration devolve into ineffective and autocratic actions that fail to serve the needs of its citizens.

On many occasions, Bernanke shows how elected officials remind administrators of the real-world impact of their policy actions.  The give and take of politics is a bridge between a government policy idea and citizen impact.


The Affordable Care Act is not perfect because of politics but modifications made are the result of political input from the constituents of American Democracy.  Those constituents are companies, professions, and individual citizens represented by elected officials who work with government agencies responsible for administration.  It is a messy process, but politics is a bridge between thought and deed that can (when discounted) devolve into autocratic dictatorship; i.e. a dictatorship that inevitably leads to unintended consequences that fail to meet the needs of represented citizens.

The Federal Reserve, the Departments of Treasury, and America’s elected officials successfully saved America from a second Great Depression.  Messy politics saves America; i.e., the political interface between President Bush, President Obama, Treasury Secretaries Paulson and Geithner, Federal Reserve Chairman Bernanke, Senators and Representatives of Congress, and the Supreme Court cussed, discussed, agreed, and disagreed to keep America great.

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