Okay, let's go ahead and get started. I would like to welcome the students back for our second lecture today, as well as our faculty. I know we have some new guests and friends that are here today. You are in for a treat if it's anything like it was Tuesday; this will be another great session. Without further ado, Chairman Bernanke, thank you very much for coming back. That's good news. As you know, today is the second of four lectures on the financial crisis and the Federal Reserve. I think it's very helpful to try to put the recent crisis and the ongoing recovery into a historical context. Last time, we talked about the origins of central banking going back to the Bank of England and the debates of the 19th century. We also discussed the origins of the Federal Reserve and its first great challenge, which was the Great Depression of the 1930s. We drew some lessons from the 1930s that will come back and be relevant as we discuss more recent events. Today, I'm going to pick up the history after World War II, talking about some important episodes after the war. However, I will be getting into the beginnings of the crisis. So, the latter part of today's lecture and all of next week will be about the crisis. As we go along, I just want to make sure you keep your eye on the ball, so to speak. The two basic ideas, the two basic missions of a central bank are macroeconomic stability and financial stability. The first mission is about maintaining stable growth and keeping inflation low and stable. The principal policy tool for maintaining macroeconomic stability is monetary policy. In normal times, the Fed or other central banks will use open market...
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