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Bernanke tackles price stability, jobs
Federal Reserve Bank Chairman Ben Bernanke
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TEXT OF STORY
Kai Ryssdal: You know, it is not hard for Ben Bernanke to find the limelight. All he has to do is talk, really, and people pay attention. Such was the case today. The Fed Chairman gave a lunchtime talk at the Economic Club of New York. Took some questions afterward as well in which he gave some clues as to our economic future. Marketplace's Jeremy Hobson reports now from New York.
JEREMY HOBSON: The Fed has two mandates. One is price stability, basically keeping inflation in check. The other is maximum employment. On that issue, Chairman Bernanke said even with a recovery, it'll be a tough road ahead.
CHAIRMAN BEN BERNANKE: A number of factors suggest that employment gains may be modest during the early stages of the expansion.
On the issue of price stability, Bernanke said he's still not too worried about inflation. Former Fed Economist Ann Owen, now a professor at Hamilton College, says the chairman's words are part of the Fed's strategy to deal with inflation.
ANN OWEN: So if Bernanke can convince us that the Fed is going to keep inflation in check, that's actually a big part of the job of actually keeping inflation in check by keep inflation expectations very moderate.
DAN COOK: Yeah, I think one of his major roles throughout this whole crisis has been his composure, and reassuring.
That's Dan Cook, senior market analyst at IG Markets in Chicago. He says the most surprising thing about Bernanke's speech was that he specifically acknowledged the weakening dollar. Currency traders reacted immediately, sending the dollar higher against foreign currencies. In a brief Q&A, Bernanke left the comfort of his dual mandate and talked about a problem that hasn't gone away. Institutions that are still too big to fail.
CHAIRMAN BERNANKE: We need to have some alternative to bankruptcy or bailout. We need to have another way to close firms that have come to the brink of failure without destroying the rest of the system.
That, of course, is something the powerful Fed chairman doesn't have the power to do, at least not yet.
In New York, I'm Jeremy Hobson for Marketplace.
About the author
Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead. Follow Jeremy on Twitter @jeremyhobson
How about we mentally return to 9/12, where everything was a national security issue? If having the American economy fail because companies are so big they will bring down the economy, isn't a national security issue...what is?
As someone else pointed out, it sure is funny how the Republicans tout one philosophy--a weak dollar helps the economy, for instance--when in power, but then do a backflip--the Democrats need to firm up the dollar--when out of power.
When was the last time Bernake was right?
During the real estate bubble, during his testimony to congress, he kept saying there was no problem in real estate, then he said problem is well contained in some segments etc. You know what happened after that.
Second, FED was supposed regulate loan standards. You know how much lousy job FED did.
What credibility does FED have.
There's already an alternative to bankruptcy and bailout for institutions "too big to fail." It's called the Sherman Antitrust Act. While I haven't read the relevant laws, it certainly seems to me that any institution that's truly "too big to fail" is too big for any new competitors to challenge, and so must be broken up.
