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To Avoid Large And Unsustainable Budget Deficits, The Nation Will Ultimately Have To Choose Among Higher Taxes, Modifications To Entitlement Programs Such As Social Security And Medicare, Less Spending On Everything Else From Education To Defense, Or Some Combination Of The Above.

-Ben Bernanke

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To Avoid Large And

Ben Bernanke

...

To Avoid Large And Unsustainable Budget Deficits, The Nation Will Ultimately Have To Choose Among Higher Taxes, Modifications To Entitlement Programs Such As Social Security And Medicare, Less Spending On Everything Else From Education To Defense, Or Some Combination Of The Above.

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...the Federal Reserve Has The Capacity To Operate In Domestic Money Markets To Maintain Interest Rates At A Level Consistent With Our Economic Goals

Our Mission, As Set Forth By The Congress Is A Critical One: To Preserve Price Stability, To Foster Maximum Sustainable Growth In Output And Employment, And To Promote A Stable And Efficient Financial System That Serves All Americans Well And Fairly.

The Risk That The Economy Has Entered A Substantial Downturn Appears To Have Diminished Over The Past Month Or So.

Importantly, In The 1930s, In The Great Depression, The Federal Reserve, Despite Its Mandate, Was Quite Passive And, As A Result, Financial Crisis Became Very Severe, Lasted Essentially From 1929 To 1933.

Great Depression

The Federal Reserve Will Not Monetize The Debt.

Federal Reserve

Economics Is A Highly Sophisticated Field Of Thought That Is Superb At Explaining To Policymakers Precisely Why The Choices They Made In The Past Were Wrong. About The Future, Not So Much.

We’ve Never Had A Decline In House Prices On A Nationwide Basis. So, What I Think What Is More Likely Is That House Prices Will Slow, Maybe Stabilize, Might Slow Consumption Spending A Bit. I Don’t Think It’s Going To Drive The Economy Too Far From Its Full Employment Path, Though.

A Meritocracy Is A System In Which The People Who Are The Luckiest In Their Health And Genetic Endowment; Luckiest In Terms Of Family Support, Encouragement And, Probably, Income; Luckiest In Their Educational And Career Opportunities; And Luckiest In So Many Other Ways Difficult To Enumerate - These Are The Folks Who Reap The Largest Rewards.

The Financial Crisis Appears To Be Mostly Behind Us, And The Economy Seems To Have Stabilized And Is Expanding Again.

I Don't See Much Evidence Of An Equity Bubble.

I Think One Of The Lessons Of The Depression - And This Is Something That Franklin Roosevelt Demonstrated - Was That When Orthodoxy Fails, Then You Need To Try New Things. And He Was Very Willing To Try Unorthodox Approaches When The Orthodox Approach Had Shown That It Was Not Adequate.

[virtual Currencies] May Hold Long-term Promise, Particularly If The Innovations Promote A Faster, More Secure And More Efficient Payment System.

If Current Trends Continue, The Typical U.s. Worker Will Be Considerably More Productive Several Decades From Now. Thus, One Might Argue That Letting Future Generations Bear The Burden Of Population Aging Is Appropriate, As They Will Likely Be Richer Than We Are Even Taking That Burden Into Account.

If You Are Asking Me If I Would Advocate That The Chinese Go To Greater Flexibility In Their Exchange Rate, I Certainly Would.

I Think That Having Good Data, Good Statistics-and The United States Generally Has Better Macroeconomic Statistics Than Most Countries-and Having Good Economists To Interpret Those Data And Present The Policy Alternatives, Has A Substantially Beneficial Effect On Policymaking In The United States.

I Assure This Committee That, If I Am Confirmed, I Will Be Strictly Independent Of All Political Influences... Essential To That Institution's Ability To Function Effectively And Achieve Its Mandated Objectives.

Monetary Policy Is Not A Panacea.

Monetary Policy

We Do Not Expect Significant Spillovers From The Subprime Market To The Rest Of The Economy Or To The Financial System.

Economics Is A Very Difficult Subject. I've Compared It To Trying To Learn How To Repair A Car When The Engine Is Running.

If I Am Confirmed, I Am Confident That My Colleagues On The Federal Open Market Committee And I Will Maintain The Focus On Long-term Price Stability As Monetary Policy's Greatest Contribution To General Economic Prosperity And Maximum Employment.

Weaker Currencies Abroad Mean A Strong Dollar, And A Stronger Dollar, Together With A Weak Global Environment, Is A Drag On The U.s. Economy. So It's Important, As It Affects Overall Levels Of Production And Employment In The U.s. There Are Many Domestic Industries Doing Well In The United States, Notwithstanding A Strong Dollar.

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Price Of Success

A Gold Standard Doesn't Imply Stability In The Prices Of The Goods And Services That People Buy Every Day, It Implies A Stability In The Price Of Gold Itself.

The More Guidance A Central Bank Can Provide The Public About How Policy Is Likely To Evolve The Greater The Chance That Market Participants Will Make Appropriate Inferences.

Like Gold, U.s. Dollars Have Value Only To The Extent That They Are Strictly Limited In Supply. But The U.s. Government Has A Technology, Called A Printing Press (or, Today, Its Electronic Equivalent), That Allows It To Produce As Many U.s. Dollars As It Wishes At Essentially No Cost. By Increasing The Number Of U.s. Dollars In Circulation, Or Even By Credibly Threatening To Do So, The U.s. Government Can Also Reduce The Value Of A Dollar In Terms Of Goods And Services, Which Is Equivalent To Raising The Prices In Dollars Of Those Goods And Services.

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Commercial Banks

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It's True That The Federal Reserve Faces A Lot Of Political Pressure And Is Unpopular In Many Circles.

The Crisis And Recession Have Led To Very Low Interest Rates, It Is True, But These Events Have Also Destroyed Jobs, Hamstrung Economic Growth And Led To Sharp Declines In The Values Of Many Homes And Businesses.

To Avoid Large And Unsustainable Budget Deficits, The Nation Will Ultimately Have To Choose Among Higher Taxes, Modifications To Entitlement Programs Such As Social Security And Medicare, Less Spending On Everything Else From Education To Defense, Or Some Combination Of The Above.

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The Economist John Maynard Keynes Said That In The Long Run, We Are All Dead. If He Were Around Today He Might Say That, In The Long Run, We Are All On Social Security And Medicare.

Inflation Is Certainly Low And Stable And, Measured In Unemployment And Labour-market Slack, The Economy Has Made A Lot Of Progress. The Pace Of Growth Is Disappointingly Slow, Mostly Because Productivity Growth Has Been Very Slow, Which Is Not Really Something Amenable To Monetary Policy. It Comes From Changes In Technology, Changes In Worker Skills And A Variety Of Other Things, But Not Monetary Policy, In Particular.

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Nobody Likes To Fail But Failure Is An Essential Part Of Life And Of Learning. If Your Uniform Isn't Dirty, You Haven't Been In The Game.

The Risk Exists That, With Aggregate Demand Exhibiting Considerable Momentum, Output Could Overshoot Its Sustainable Path, Leading Ultimately In The Absence Of Countervailing Monetary Policy Action To Further Upward Pressure On Inflation.

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There's No Denying That A Collapse In Stock Prices Today Would Pose Serious Macroeconomic Challenges For The United States. Consumer Spending Would Slow, And The U.s. Economy Would Become Less Of A Magnet For Foreign Investors. Economic Growth, Which In Any Case Has Recently Been At Unsustainable Levels, Would Decline Somewhat. History Proves, However, That A Smart Central Bank Can Protect The Economy And The Financial Sector From The Nastier Side Effects Of A Stock Market Collapse.

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Great Depression

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