Regardless of the academic merits, the Nobel prize awarded to Ben Bernanke—as well as to Douglas Diamond and Philip Dybvig—for their work on financial crises, particularly during the Great Depression, will entail a negative effect. It will help reinforce the myth initiated by Milton Friedman, and sustained by the former Fed chairman himself, that the disaster in the 1930s was caused by the central bank´s failure to pump money.
Diamond and Dybvig have written about the risks of “maturity transformation” (the mismatch between demand deposits that clients can withdraw at short notice and long-term loans provided by banks). In the dire context of the early
