The basic prescription for preventing deflation is therefore straightforward, at least in principle: Use monetary and fiscal policy as needed to support aggregate spending.
BEN BERNANKEIn fact, the world needs more nerds.
More Ben Bernanke Quotes
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How much would you pay to avoid a second Depression?
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The economist John Maynard Keynes said that in the long run, we are all dead. If he were around today he might say that, in the long run, we are all on Social Security and Medicare.
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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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It takes about two and a half percent growth just to keep unemployment stable.
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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.
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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.
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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.
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Although low inflation is generally good, inflation that is too low can pose risks to the economy – especially when the economy is struggling.
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The GSEs are adequately capitalized. They are in no danger of failing.
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The central bank needs to be able to make policy without short term political concerns.
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Over the years, the U.S. economy has shown a remarkable ability to absorb shocks of all kinds, to recover, and to continue to grow.
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It’s the price of success: people start to think you’re omnipotent.
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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.
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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.
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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.
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Nobody really understands gold prices and I don’t pretend to understand them either.
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I don’t think that Chinese ownership of U.S. assets is so large as to put our country at risk economically.
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I don’t see much evidence of an equity bubble.
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The more important reason is that the research itself provides an important long-run perspective on the issues that we face on a day-to-day basis.
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I don’t fully understand movements in the gold price.
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While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.
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Nobody likes to fail but failure is an essential part of life and of learning. If your uniform isn’t dirty, you haven’t been in the game.
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The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.
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The American people are among the most productive in the world. We have the best technologies. We have – great universities. We have entrepreneurs.
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If you are asking me if I would advocate that the Chinese go to greater flexibility in their exchange rate, I certainly would.
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If Wall Street crashes, does Main Street follow? Not necessarily.
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