Mar 02 2011
I cannot claim to be an expert regarding monetary policy and Bernanke opened his talk by recognizing that that the majority of the public consists of nonexperts and, “…must therefore rely on the diligent reporting, clear thinking, and lucid writing of reporters determined to go beyond dueling bumper stickers and sound bites to help people understand what they need to make good decisions, both in their personal finances and at the polls.” The chairman went on to discuss the current economic tone of the country, citing minimal increases in economic prosperity throughout 2009, but encouraging the public that 2011 “seems likely to lead to a more rapid pace of economic recovery.” However, he then claimed that beyond production and spending, it is essential for job growth to be re-established and stabilized before any real recovery can occur.
Bernanke continued his talk by discussing monetary policies and addressing the asset purchase program, citing its benefits, but assuring the public that the Federal Reserve will review the program and exit from it “at the appropriate time.” Fiscal Policy was the last topic Bernanke’s talk commented on, bringing up the issue of Social Security as the baby boom generation begins to reach retirement age. The chairman urged Congress and the Administration to look at spending and taxes and to focus on reducing the deficit. He also called for more investment into programs promoting skill building, research and development, and providing public infrastructure. Bernanke ended by pushing the argument for a better economy beyond simply growth, “Our nation cannot reasonably expect to grow its way out of our fiscal imbalances, but a more productive economy will ease the trade-offs that we face.”
Bernanke then addressed a few questions from the audience. He commented briefly on his personal struggle being the face of the Federal Reserve at such a turbulent time in the US and the importance of having a competent staff. He also discussed some of the issues that come with a poor job market citing that the majority of those currently unemployed in the US have been so for 6 months or more, meaning that they are rapidly losing their skill sets, contacts, and overall knowledge of the field, posing yet another hurdle on the road to job growth and recovery. His final comments were regarding the separation of the Fed from short-term politics. He warned against the use of the Fed as an arm of Congress, leading to bank decisions that could potentially be dictated by short term government decisions that could lead to a negative outcome for the country’s overall economic stability.
This experience, even for those of us with no economic background, was a chance to get acquainted with the man charged with the job of leading our country through this economic crisis. We were able to get a sense of the direction, the needs, the flaws, and the complexity of this economic situation- all from the man who is in the middle of it all. Overall, an incredible afternoon and exceptional learning experience.