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.
BEN BERNANKEIndeed, 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.
More Ben Bernanke Quotes
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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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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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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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If Wall Street crashes, does Main Street follow? Not necessarily.
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A money-financed tax cut is essentially equivalent to Milton Friedman’s famous ‘helicopter drop’ of money.
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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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The benefit of appointing a hawkish central banker is the increased inflation-fighting credibility that such an appointment brings.
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The amount of currency in circulation is not changing. The money supply is not changing in any significant way.
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The Fed is totally open.
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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.
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Under current law, on January 1, 2013, there’s going to be a massive fiscal cliff of large spending cuts and tax increases.
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I am confident that we will meet whatever challenges the future may bring.
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The impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.
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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.
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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