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The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis.

Ben Bernanke

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.
BEN BERNANKE

Employment House Thinking
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.
BEN BERNANKE

Government Technology Wish
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.
BEN BERNANKE

Demand Path Risk
If you are asking me if I would advocate that the Chinese go to greater flexibility in their exchange rate, I certainly would.
BEN BERNANKE

Asking Chinese Rate
If you are not happy with yourself, even the loftiest achievements won’t bring you much satisfaction.
BEN BERNANKE

Achievement Not Happy Satisfaction
I come from Main Street, from a small town that’s really depressed.
BEN BERNANKE

Main Street Small Towns
A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street. But what effect would it have on the broader U.S. economy? If Wall Street crashes, does Main Street follow? Not necessarily.
BEN BERNANKE

Country Stock Street Wall White
I and others were mistaken early on in saying that the subprime crisis would be contained. The causal relationship between the housing problem and the broad financial system was very complex and difficult to predict.
BEN BERNANKE

Casual Financial Problem Relationship
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.
BEN BERNANKE

Employment Focus Long
In fact, the world needs more nerds.
BEN BERNANKE

Needs Nerd World
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.
BEN BERNANKE

Chance Guidance Inference
With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly.
BEN BERNANKE

Incentives Safety Use
Education – lifelong education for everyone – from toddlers to workers well advanced in their careers – is indeed an excellent investment for individuals and society as a whole.
BEN BERNANKE

Career Education Money
It is not the responsibility of the Federal Bank – nor would it be appropriate – to protect lenders and investors from the consequences of their decisions
BEN BERNANKE

Decision Economics Responsibility
In the future, my communications with the public and with the markets will be entirely through regular and formal channels.
BEN BERNANKE

Communication Formal
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.
BEN BERNANKE

Depression Financial Great Result

The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis.

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The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis.

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