U.S. Federal Reserve Chairman Ben S. Bernanke saved the global economy from falling into a Great Depression by presiding over an historic increase in the size of the central bank’s balance sheet, said Harvard’s Niall Ferguson.

“He turned the Fed into the biggest hedge fund in history,” said Ferguson, an historian at Harvard University, in a recent speech delivered at a conference in Copenhagen hosted by the Skagen Fund. “He bought stuff that no central bank has ever bought before. He bought utter garbage and in doing so, I believe he saved us from a Great Depression.”

The Fed pumped $3.3 trillion into supporting the financial system as Bernanke acted to contain the credit crisis and prevent the global economy from sinking into a depression. It will take about seven years before the U.S. central bank’s balance sheet returns to normal levels, while the measures taken will create 3 million jobs by 2012, Federal Reserve Vice Chairman Janet Yellen said on Jan. 8.

“The Fed bailed out the Europeans almost as much as it bailed out the American banks,” Ferguson said. “That’s why we’re not in a Great Depression.”

Though the U.S. has yet to take measures to deal with its over-indebtedness, the world’s largest economy remains better off than the European Union, where an absence of fiscal union is threatening the survival of the euro area, Ferguson said.

The 17-member euro region will probably see defaults this year as Greece and Ireland face unsustainable fiscal situations, he said.