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How much would you pay to avoid a second Depression?

Ben Bernanke

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.
BEN BERNANKE

Effort Government Trying
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.
BEN BERNANKE

Coffee Responsibility Years
One might as well try to perform brain surgery with a sledgehammer.
BEN BERNANKE

Brain might Trying
We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.
BEN BERNANKE

Economy Financial Significant
The economic repercussions of a stock market crash depend less on the severity of the crash itself than on the response of economic policymakers, particularly central bankers.
BEN BERNANKE

Bankers Crash Economics
I don’t fully understand movements in the gold price.
BEN BERNANKE

Gold Movement Price
House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.
BEN BERNANKE

Fundamental Past Strong Years
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.
BEN BERNANKE

Country Dollar Employment Overall Strong
The Fed is totally open.
BEN BERNANKE

Fed Feel Open Totally
Weaker currencies abroad mean a strong dollar, and a stronger dollar, together with a weak global environment, is a drag on the U.S. econom.
BEN BERNANKE

Important Mean Strong
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
A money-financed tax cut is essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.
BEN BERNANKE

Cutting Helicopters Milton
If you are not happy with yourself, even the loftiest achievements won’t bring you much satisfaction.
BEN BERNANKE

Achievement Not Happy Satisfaction
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
While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.
BEN BERNANKE

Delinquency Rising Years
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

Lessons Long Recovery

How much would you pay to avoid a second Depression?

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How much would you pay to avoid a second Depression?

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