Words matter. These are the best Ben Bernanke Quotes, and they’re great for sharing with your friends.
The financial crisis that began in the summer of 2007 was an extraordinarily complex event with multiple causes.
A gold standard doesn’t imply stability in the prices of the goods and services that people buy every day, it implies a stability in the price of gold itself.
The decline in home equity makes it more difficult for struggling homeowners to refinance and reduces the financial incentive of stressed borrowers to remain in their homes.
Given the extent of the exposures of major banks around the world to A.I.G., and in light of the extreme fragility of the system, there was a significant risk that A.I.G.’s failure could have sparked a global banking panic.
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.
In a mature economy like India’s, which is becoming modern and a financially-oriented economy, an independent central bank, responsible central bank, is really central to success.
History proves… that a smart central bank can protect the economy and the financial sector from the nastier side effects of a stock market collapse.
The children of the unemployed achieve less in school and appear to have reduced long-term earnings prospects.
The failure of Lehman Brothers demonstrated that liquidity provision by the Federal Reserve would not be sufficient to stop the crisis; substantial fiscal resources were necessary.
Long-term unemployment is particularly costly to those directly affected, of course. But in addition, because of its negative effects on workers’ skills and attachment to the labor force, long-term unemployment may ultimately reduce the productive capacity of our economy.
Achieving price stability is not only important in itself, it is also central to attaining the Federal Reserve’s other mandate objectives of maximum sustainable employment and moderate long-term interest rates.
Chairman Greenspan is, of course, a master.
Among other objectives, liquidity guidelines must take into account the risks that inadequate liquidity planning by major financial firms pose for the broader financial system, and they must ensure that these firms do not become excessively reliant on liquidity support from the central bank.
How much would you pay to avoid a second Depression?
The Federal Reserve’s job is to do the right thing, to take the long-run interest of the economy to heart, and that sometimes means being unpopular. But we have to do the right thing.
Deflation is defined as a general decline in prices, with emphasis on the word ‘general.’
I have spoken about deficits, and I think deficits are important because they address broad economic and financial stability. We need to talk about that.
Economic science concerns itself primarily with theoretical and empirical generalizations about the behavior of individuals, institutions, markets, and national economies. Most academic research falls in this category.
Actually, I’m a Republican.
For practitioners of community development, as in any field, joining a network of like-minded professionals is important for building skills and becoming aware of opportunities and resources.
Low and stable inflation in many countries is an important accomplishment that will continue to bring significant benefits.
The Fed’s policy choices can always be debated, but the quality and commitment of the Federal Reserve as a public institution is second to none, and I am proud to lead it.
The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis.
The central bank needs to be able to make policy without short term political concerns.
After a long period in which the desired direction for inflation was always downward, the industrialized world’s central banks must today try to avoid major changes in the inflation rate in either direction.
The Federal Reserve has never suffered any losses in the course of its normal lending to banks and, now, to primary dealers.
The Federal Reserve Act requires the Federal Reserve to report annually on its operations and to publish its balance sheet weekly.
Most of the policies that support robust economic growth in the long run are outside the province of the central bank.
I am very proud of my nerd-dom.
In the future, my communications with the public and with the markets will be entirely through regular and formal channels.
Central bankers got it right in the United States in 1987 when they avoided deflationary pressures as well as serious trouble in the banking system.
Market discipline can only limit moral hazard to the extent that debt and equity holders believe that, in the event of distress, they will bear costs.
It must be awfully frustrating to get a small raise at work and then have it all eaten by a higher cost of commuting.
The amount of currency in circulation is not changing. The money supply is not changing in any significant way.
The Fed’s independence is critical.
High levels of homeownership have been shown to foster greater involvement in school and civic organizations, higher graduation rates, and greater neighborhood stability.
Certainly, 9 percent unemployment and very slow growth is not a good situation.
Banks need to continue to lend to creditworthy borrowers to earn a profit and remain strong.
Building a rainy-day fund during good times may not be politically popular, but it can pay off during the bad times.
China is growing very quickly and is clearly becoming an important player in the world economy.
Economic engineering is about the design and analysis of frameworks for achieving specific economic objectives.
Banks will have to win the confidence of their customers through fair dealing, making good loans, and remaining financially healthy.
Income inequality is troubling because, among other things, it means that many people in our society don’t have the opportunities to advance themselves.
My proposal that Fed governors should signal their commitment to public service by wearing Hawaiian shirts and Bermuda shorts has so far gone unheeded.
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.
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.
In the typical economic recovery, a resurgent housing sector helps fuel reemployment and rising incomes.
In the past, Federal Reserve chairmen have not generally gone directly to the public.
Rents should begin to decelerate as the demand for owner-occupied housing stabilizes and the supply of rental units increases.
The benefit of appointing a hawkish central banker is the increased inflation-fighting credibility that such an appointment brings.
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.
The Depression was an incredibly dramatic episode – an era of stock-market crashes, breadlines, bank runs and wild currency speculation, with the storm clouds of war gathering ominously in the background… For my money, few periods are so replete with human interest.
In the future, financial firms of any type whose failure would pose a systemic risk must accept especially close regulatory scrutiny of their risk-taking.
Remember that physical beauty is evolution’s way of assuring us that the other person doesn’t have too many intestinal parasites.
If you want to understand geology, study earthquakes. If you want to understand the economy, study the Depression.
You want to put the fire out first and then worry about the fire code.
Economic management involves the operation of economic frameworks in real time – for example, in the private sector, the management of complex financial institutions or, in the public sector, the day-to-day supervision of those institutions.
Community development has a long history of innovation and learning from experience.
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.
A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street.
Consumers going through foreclosure typically will see their credit scores drop, raising longer-term questions about their ability to rebound financially and perhaps pursue a more sustainable home purchase at some later point.
Only a strong economy can create higher asset values and sustainably good returns for savers.
In the tradition of national income accounting, economic policymakers have typically focused on variables such as income, wealth, and consumption.
Of course, economic forecasts must be revised when new information arrives and are thus necessarily provisional.
As we try to make the financial system safer, we must inevitably confront the problem of moral hazard.
As an educator myself, I understand the profound effect that good teachers and a quality education have on the lives of our young people.
Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates.
No economy can succeed without a high-quality workforce, particularly in an age of globalization and technical change.
The best solution to income inequality is providing a high-quality education for everybody. In our highly technological, globalized economy, people without education will not be able to improve their economic situation.
Clear communication is always important in central banking, but it can be especially important when economic conditions call for further policy stimulus but the policy rate is already at its effective lower bound.
Monetary policy has less room to maneuver when interest rates are close to zero, while expansionary fiscal policy is likely both more effective and less costly in terms of increased debt burden when interest rates are pinned at low levels.
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.
Every effort needs to be made to try and offset the costs of Katrina and Rita by reductions in other government programs, especially those that are wasteful, duplicative and ineffective.
There are a number of institutions globally where the Federal Reserve typically leads the U.S. effort to work with financial regulators from other countries, and we try to, to the extent possible, establish international standards for how – the amount of capital a bank should hold, for example, or how much.
Because financially capable consumers ultimately contribute to a stable economic and financial system as well as improve their own financial situations, it’s clear that the Federal Reserve has a significant stake in financial education.
When the economic well-being of their nation demanded a strong and creative response, my colleagues at the Federal Reserve… mustered the moral courage to do what was necessary.
To be sure, faster growth in nominal labor compensation does not necessarily portend higher inflation.
In many spheres of human endeavor, from science to business to education to economic policy, good decisions depend on good measurement.
If two people always agree, one of them is redundant.
Fostering transparency and accountability at the Federal Reserve was one of my principal objectives when I became Chairman in February 2006.
I come from Main Street, from a small town that’s really depressed.
Deflation can be particularly dangerous when a financial system is shaky, with household and corporate balance sheets in poor shape and banks undercapitalized and heavily burdened with bad loans.
When historical relationships are taken into account, it is difficult to ascribe the house price bubble either to monetary policy or to the broader macroeconomic environment.
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.
The ultimate purpose of economics, of course, is to understand and promote the enhancement of well-being.
I’ve never been on Wall Street. And I care about Wall Street for one reason and one reason only because what happens on Wall Street matters to Main Street.
Obviously, I haven’t succeeded in defusing the political concerns about the Fed.
I got into economics because I wanted to make things better for the average person.
All the Federal Reserve can do is make loans against collateral.
Many savers are also homeowners; indeed, a family’s home may be its most important financial asset. Many savers are working, or would like to be.
I would argue that no financial instrument counted as regulatory capital should be allowed to receive any protection from losses.
Since World War II, inflation – the apparently inexorable rise in the prices of goods and services – has been the bane of central bankers.
If I am confirmed, I am confident that my colleagues on the Federal Open Market Committee and I will maintain the focus on long-term price stability as monetary policy’s greatest contribution to general economic prosperity and maximum employment.
The Federal Reserve, like other central banks, wields powerful tools; democratic accountability requires that the public be able to see how and for what purposes those tools are being used.
It takes about two and a half percent growth just to keep unemployment stable.
After the 1929 crash, the Federal Reserve mistakenly focused its policies on preserving the gold value of the dollar rather than on stabilizing the domestic economy.
If bankers become overly conservative in response to past lending mistakes – or if examiners force such behavior – it will hurt bankers’ own long-term interests and the economy in general.
The banks have accounts with the Fed, much the same way that you have an account in a commercial bank.
I think one of the lessons of the Depression – and this is something that Franklin Roosevelt demonstrated – was that when orthodoxy fails, then you need to try new things. And he was very willing to try unorthodox approaches when the orthodox approach had shown that it was not adequate.
Our mission, as set forth by the Congress is a critical one: to preserve price stability, to foster maximum sustainable growth in output and employment, and to promote a stable and efficient financial system that serves all Americans well and fairly.
Our financial system is so complicated and so interactive – so many different markets in different countries and so many sets of rules.
If Australia finds it has a strong Australian dollar, and it has higher unemployment, then it would have to respond, and that would either be by increasing domestic demand or by weakening its own currency.
At the most basic level, a central bank must be clear and open about its actions and operations, particularly when they involve the deployment of public funds.
If you are not happy with yourself, even the loftiest achievements won’t bring you much satisfaction.
Different countries have different kinds of financial structures.
To minimize market uncertainty and achieve the maximum effect of its policies, the Federal Reserve is committed to providing the public as much information as possible about the uses of its balance sheet, plans regarding future uses of its balance sheet, and the criteria on which the relevant decisions are based.
Following an extended boom in housing, the demand for homes began to weaken in mid-2005. By the middle of 2006, sales of both new and existing homes had fallen about 15 percent below their peak levels. Homebuilders responded to the fall in demand by sharply curtailing construction.
Because a person has to be either working or looking for work to be counted as part of the labor force, an increase in the number of people too discouraged to continue their search for work would reduce the unemployment rate, all else being equal – but not for a positive reason.
The Fed needs an approach that consolidates the gains of the Greenspan years and ensures that those successful policies will continue – even if future Fed chairmen are less skillful or less committed to price stability than Mr. Greenspan has been.
There are limits to monetary policy.
The public in many countries is understandably concerned by the commitment of substantial government resources to aid the financial industry when other industries receive little or no assistance. This disparate treatment, unappealing as it is, appears unavoidable.
