The room went quiet and tense for a few seconds after our scripted performance, as we waited for the barrage of questions that we'd overprepared for. We'd guessed that Bernanke, the rising star on the board and rumored successor-in-waiting to Greenspan, would be the one to cut into us with exotic volleys about, say, indirect inflation targeting. But Gramlich turned out to be the governor who unsettled us with the most aggressive naysaying. He saw, among other things, capacity utilization figures lingering in the basement, and didn't see a silver bullet in the "resolution of geopolitical tensions."
Gramlich was a regulator by trade, and by heart. He'd spent much of the previous decade studying, in apparent isolation, the new crops of Wall Street–backed financial products being hawked with vigor in hastily constructed banks, thrifts, and temporary office trailers on what seemed like every urban neighborhood corner where once there stood, say, a small business with employees who sold real products. And he didn't see a silver bullet, either, where Greenspan and Bernanke did: sharply rising home values, flexibly designed and unusually accessible mortgage and mortgage-refinancing options, new home construction, and so on — in short, our economy's coordinated encircling of everything associated with residential real estate, made possible in part by stupidly low long-term interest rates.
Is extracting equity from one's house an increase in wealth? Gramlich asked the panel. Does any of this make individual persons, or the country, wealthier?
Good questions, all. But how were we really supposed to know? We just wanted to mimic what they would have said, and then to win, and then to return to drinking in our basements.
As with any interschool competition, teamwork was essential in advancing. So here's a rundown of the Severn players:
Peter anchored the lineup with his portrayal of Alan Greenspan, whose reputation was still nearly flawless in those days. One of the first things our team did collaboratively was read Bob Woodward's Maestro, then regarded as the definitive account of Greenspan's high-riding Fed tenure. Each chapter was about an episode in recent economic history — the 1987 stock-market crash, the "Asian Tigers" stallout, Russia's debt default, the Long-Term Capital Management collapse, etc. — that Greenspan had perfectly managed by using his . . . magic? The argument of Woodward's book seemed to boil down to Alan Greenspan saving everything via his conjuring powers. And Peter's dry, deliberate, and obfuscating delivery made him an obvious choice for a character with such "gravitas," as we'd put it. "International trade is not a zero-sum game," Peter would say in rehearsals, to our giggles.
Tim played Ben Bernanke, the rising-star Princeton economist and Fed governor whom many were pegging — correctly, as it turned out — as Greenspan's eventual successor. Bernanke had been making waves at the time as the most intellectually creative member of the board — meaning, he basically believed everything Greenspan said, but would occasionally pay lip service to new ideas like establishing semi-official inflation targets. Tim was the smartest member of our team and had put in deliberately for the part of Bernanke. He even got into the habit of quoting Bernanke's own lines from speeches during the question-and-answer segment — a tic that the judges would later take uneasy note of in toting up our scores.