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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

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
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
How much would you pay to avoid a second Depression?
BEN BERNANKE

Borrow Depression Great Pay
The people who best use their advantages, or overcome adversity, and work honestly are those most worthy of admiration.
BEN BERNANKE

Adversity People Use
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
It’s true that the Federal Reserve faces a lot of political pressure and is unpopular in many circles.
BEN BERNANKE

Circles Political Pressure
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
The central bank needs to be able to make policy without short term political concerns.
BEN BERNANKE

Able Needs Political
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 takes about two and a half percent growth just to keep unemployment stable.
BEN BERNANKE

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

Communication Formal
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
The Federal Reserve will not monetize the debt.
BEN BERNANKE

Debt Federal Reserve Reserves
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 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
Speaking as somebody who has been happily married for 35 years, I can’t imagine any choice more consequential for a lifelong journey than the choice of a traveling companion.
BEN BERNANKE

Journey Travel Years
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
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
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
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
In fact, the world needs more nerds.
BEN BERNANKE

Needs Nerd World
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
BEN BERNANKE

Growth Long Running
The crisis in Europe has affected the US economy by acting as a drag on our exports, weighing on business and consumer confidence and pressuring US financial markets and institutions.
BEN BERNANKE

Acting Country Financial Lace
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
Economics is a very difficult subject. I’ve compared it to trying to learn how to repair a car when the engine is running.
BEN BERNANKE

Car Running Trying
I assure this committee that, if I am confirmed, I will be strictly independent of all political influences… essential to that institution’s ability to function effectively and achieve its mandated objectives.
BEN BERNANKE

Essentials Independent Political
The American people are among the most productive in the world. We have the best technologies. We have – great universities. We have entrepreneurs.
BEN BERNANKE

Entrepreneur People Technology World

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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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.

Related Topics

Popular Authors

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