Ben Bernanke stepped down as Chairman of the Federal Reserve on Friday. So what will be his legacy? Bernanke, although he didn't anticipate the financial crisis, steered the Fed through the most turbulent of financial environments since the Great Depression. Notably, as an academic, Bernanke was probably best known for his work on the Great Depression. His key insight was that the collapse of banks during the Great Depression resulted in credit channels not working properly. How well did he steer the Fed over the past eight years? You can read articles where Bernanke's performance is assessed at the WSJ, Project Syndicate and PBS.
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.