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We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.

Ben Bernanke

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

Communication Formal
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.
BEN BERNANKE

Employment Financial Growth
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
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.
BEN BERNANKE

Choices Fields Past
It’s true that the Federal Reserve faces a lot of political pressure and is unpopular in many circles.
BEN BERNANKE

Circles Political Pressure
Both humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history.
BEN BERNANKE

Humanity Incentives Today
Although low inflation is generally good, inflation that is too low can pose risks to the economy – especially when the economy is struggling.
BEN BERNANKE

Economy Risk Struggle
I generally leave the details of fiscal programs to the Administration and Congress. That’s really their area of authority and responsibility, and I don’t think it’s appropriate for me to second guess.
BEN BERNANKE

Details Responsibility Thinking
The central bank needs to be able to make policy without short term political concerns.
BEN BERNANKE

Able Needs Political
It must be awfully frustrating to get a small raise at work and then have it all eaten by a higher cost of commuting.
BEN BERNANKE

Cost Frustrating Raises
The sources of deflation are not a mystery. Deflation is in almost all cases a side effect of a collapse of aggregate demand.. a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.
BEN BERNANKE

Cutting Ongoing Order
September and October of 2008 was the worst financial crisis in global history, including the Great Depression.
BEN BERNANKE

Financial October September
A money-financed tax cut is essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.
BEN BERNANKE

Cutting Helicopters Milton
I don’t think that Chinese ownership of U.S. assets is so large as to put our country at risk economically.
BEN BERNANKE

Country Risk Thinking
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
The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.
BEN BERNANKE

Months Past Risk

We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.

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We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.

Related Topics

Popular Authors

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