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If Wall Street crashes, does Main Street follow? Not necessarily.

Ben Bernanke

I served seven years as the chair of the Princeton economics department where I had responsibility for major policy decisions, such as whether to serve bagels or doughnuts at the department coffee hour.
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Coffee Responsibility Years
The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.
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Months Past Risk
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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Country Dollar Employment Overall Strong
Achieving price stability is not only important in itself, it is also central to attaining the Federal Reserve’s other mandate objectives of maximum sustainable employment and moderate long-term interest rates.
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Employment Important Long
The Federal Reserve is not currently forecasting a recession.
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Federal Forecasting Recession Reserve
Under current law, on January 1, 2013, there’s going to be a massive fiscal cliff of large spending cuts and tax increases.
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Cutting Important Law
Developments in financial markets can have broad economic effects felt by many outside the markets.
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Development Economic Financial
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.
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Incentives Safety Use
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.
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Depression Financial Great Result
Every effort needs to be made to try and offset the costs of Katrina and Rita by reductions in other government programs, especially those that are wasteful, duplicative and ineffective.
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Effort Government Trying
It must be awfully frustrating to get a small raise at work and then have it all eaten by a higher cost of commuting.
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Cost Frustrating Raises
In a manner as nearly consistent as possible with full utilization of economic resources and low and stable inflation. In other words, the best way to get out of trouble is not to get into it in the first place.
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Best Economic Inflation Resources Way
Nobody really understands gold prices and I don’t pretend to understand them either.
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Gold Gold Price
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.
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Country Stock Street Wall White
It’s the price of success: people start to think you’re omnipotent.
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People Price Success Thinking
The basic prescription for preventing deflation is therefore straightforward, at least in principle: Use monetary and fiscal policy as needed to support aggregate spending.
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Business Principle Support

If Wall Street crashes, does Main Street follow? Not necessarily.

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If Wall Street crashes, does Main Street follow? Not necessarily.

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