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…the Federal Reserve has the capacity to operate in domestic money markets to maintain interest rates at a level consistent with our economic goals

Ben Bernanke

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 GSEs are adequately capitalized. They are in no danger of failing.
BEN BERNANKE

Capitalized Danger Failing
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
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
The people who best use their advantages, or overcome adversity, and work honestly are those most worthy of admiration.
BEN BERNANKE

Adversity People Use
I am very proud of my nerd-dom.
BEN BERNANKE

Doms Nerd Proud
The benefit of appointing a hawkish central banker is the increased inflation-fighting credibility that such an appointment brings.
BEN BERNANKE

Bankers Benefit Fighting
Indeed, in general, healthy investment returns cannot be sustained in a weak economy, and of course it is difficult to save for retirement or other goals without the income from a job.
BEN BERNANKE

Goal Job Retirement
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.
BEN BERNANKE

Employment Important Long
Monetary policy cannot do much about long-run growth, all we can try to do is to try to smooth out periods where the economy is depressed because of lack of demand
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Growth Long Running
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
Under a cold turkey strategy, at each policy meeting the Federal Open Market Committee would make its best guess about where it ultimately wants the funds rate to be and would move to that rate in a single step.
BEN BERNANKE

Committee Country Moving
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
I don’t fully understand movements in the gold price.
BEN BERNANKE

Gold Movement Price
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
The amount of currency in circulation is not changing. The money supply is not changing in any significant way.
BEN BERNANKE

Currency Significant Way
The crisis and recession have led to very low interest rates, it is true, but these events have also destroyed jobs, hamstrung economic growth and led to sharp declines in the values of many homes and businesses.
BEN BERNANKE

Growth Home Jobs
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 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.
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Able Needs Political
How much would you pay to avoid a second Depression?
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Borrow Depression Great Pay
It takes about two and a half percent growth just to keep unemployment stable.
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Growth Two Unemployment
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
If you want to understand geology, study earthquakes. If you want to understand the economy, study the Depression.
BEN BERNANKE

Depression Earthquake Want
Investment banks manage to go bankrupt through their investment-banking activities, commercial banks manage to go bankrupt through their commercial-banking activities.
BEN BERNANKE

Banking Banks Commercial Investment
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
The Federal Reserve will not monetize the debt.
BEN BERNANKE

Debt Federal Reserve Reserves

…the Federal Reserve has the capacity to operate in domestic money markets to maintain interest rates at a level consistent with our economic goals

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…the Federal Reserve has the capacity to operate in domestic money markets to maintain interest rates at a level consistent with our economic goals

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