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It is not the responsibility of the Federal Bank – nor would it be appropriate – to protect lenders and investors from the consequences of their decisions

Ben Bernanke

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
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
September and October of 2008 was the worst financial crisis in global history, including the Great Depression.
BEN BERNANKE

Financial October September
In the future, my communications with the public and with the markets will be entirely through regular and formal channels.
BEN BERNANKE

Communication Formal
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
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
Both humanity’s capacity to innovate and the incentives to innovate are greater today than at any other time in history.
BEN BERNANKE

Humanity Incentives Today
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.
BEN BERNANKE

Issues Perspective Running
One might as well try to perform brain surgery with a sledgehammer.
BEN BERNANKE

Brain might Trying
The GSEs are adequately capitalized. They are in no danger of failing.
BEN BERNANKE

Capitalized Danger Failing
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 BERNANKE

Business Principle Support
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
A money-financed tax cut is essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.
BEN BERNANKE

Cutting Helicopters Milton
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
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
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

It is not the responsibility of the Federal Bank – nor would it be appropriate – to protect lenders and investors from the consequences of their decisions

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It is not the responsibility of the Federal Bank – nor would it be appropriate – to protect lenders and investors from the consequences of their decisions

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