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If Wall Street crashes, does Main Street follow? Not necessarily.

Ben Bernanke

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 Fed is totally open.
BEN BERNANKE

Fed Feel Open Totally
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
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
Among the largest banks, the capital ratios remain good and I don’t expect any serious problems . . . . among the large, internationally active banks that make up a very substantial part of our banking system.
BEN BERNANKE

Banking Ratio Serious
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
It takes about two and a half percent growth just to keep unemployment stable.
BEN BERNANKE

Growth Two Unemployment
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
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
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
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.
BEN BERNANKE

Long might Running
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 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
The Federal Reserve will not monetize the debt.
BEN BERNANKE

Debt Federal Reserve Reserves
If your uniform isn’t dirty, you haven’t been in the game.
BEN BERNANKE

Dirty Game Graduation
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

If Wall Street crashes, does Main Street follow? Not necessarily.

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If Wall Street crashes, does Main Street follow? Not necessarily.

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