MacroScope

Bernanke: U.S. is not Japan, and I have not changed my mind

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Of all the questions Federal Reserve Chairman Ben Bernanke was asked during his press conference on Wednesday, one appeared to pique his interest in particular: Was he being less aggressive as central bank chairman than the advice he dished out to Japan as an academic in the 1990s would prescribe?

It was the second half of the question asked by Binyamin Applebaum and yet the chairman was eager to get right to it: “Let me tackle that second part first,” he began.

Applebaum may have been channeling the Nobel-winning economist Paul Krugman, a Princeton colleague of Bernanke’s and critic of Fed policy, who recently argued the Fed chief was being inconsistent and overly cautious.

Bernanke argued that the Fed has done a lot already to support growth and bring down unemployment. Actively aiming for higher inflation with additional use of unconventional tools would risk the central bank’s long-term credibility. Here is his answer in full:

So there’s this view circulating that the views I expressed about 15 years ago on the Bank of Japan are somehow inconsistent with our current policies. That is absolutely incorrect. My views and our policies today are completely consistent with the views that I held at that time.

Q&A: Fed poised to adopt inflation target

The Federal Reserve could announce an official inflation target as early as its January 24-25 meeting, part of an ongoing effort to boost transparency.

Most analysts expect the central bank will stick with the target previously pronounced by Fed Chairman Ben Bernanke of 2 percent or a bit lower.

What exactly is an inflation target and what are its purposes? What are the downsides of publicly stating an inflation goal? Here are some questions and answers.

Bernanke at the O.K. Corral

They didn’t treat Federal Reserve Chairman Ben Bernanke ugly in Wyoming — as Texas Governor and Republican Presidential candidate Rick Perry suggested they might in his state — but they gave him food for thought.

Bernanke, in lighthearted comments opening the annual Fed Jackson Hole conference, said he’d taken advantange of his visit this year to take his family to see a rodeo, a big deal in a state that prides itself on its cowboy heritage.

At the event, Bernanke said, a rider came into the arena waving a large an American flag and told the crowd, “Now I know y’all don’t agree with everything that happens in Washington.”

Bernanke word cloud highlights recovery

Federal Reserve Chairman Ben Bernanke is a lot more focused on “recovery” than “risks,” and more voluable about “growth” than “challenges,” if one goes by a word cloud of his speech at the Kansas City Fed’s annual Jackson Hole meeting on Friday. But “crisis” also loomed fairly large, as did its solution, “policy” and “policies.” In word clouds, the biggest letters are reserved for the words that get repeated the most; the fewer mentions, the smaller the print.

Bernanke testifies before Congress

Live video coverage of this event has concluded. A video report on Federal Reserve Chairman Ben Bernanke’s semi-annual Congressional testimony on monetary policy is below and here is our story on highlights of Bernanke’s testimony.

On the wings of doves

Fed officials eager to give the ailing job market some relief are showing their stripes – or perhaps their feathers – and adding to their ranks, making it seem more likely the U.S. central bank will provide further monetary easing.

USA-FED/TWISTThe Fed has a dual mandate to provide price stability and ensure full employment. Policy makers who place priority on supporting economic growth and keeping unemployment low are called doves while those who would endure uncomfortable unemployment in order to keep inflation at bay are called hawks.

The doves were not only louder but became more numerous this week. First, the Senate voted to confirm Janet Yellen as Fed vice chairman and Sarah Raskin as a member of the board of governors.

Bernanke Who?

When it comes to investing in a turbulent market, is ignorance bliss? According to a new survey by IBM, around half of U.S. investors have never heard of Federal Reserve Chairman Ben Bernanke. This, despite the fact that 67 percent say the global financial crisis has prompted them to pay greater attention to financial news. More than one-third could not identify the current unemployment rate. In case you missed it, the jobless rate eased to 10 percent in November after hitting a 26-1/2-year high of 10.2 percent in October.

Bernanke’s Tax-Cut Flip-Flop

Ben Bernanke is trying to have it both ways.

In testimony before the Senate Banking Committee on Thursday, the Federal Reserve Chairman argued that he had tried as much as possible to stay away from fiscal issues that are outside the purview of the central bank. Democratic Senator Jack Reed, of  Rhode Island, asked Bernanke whether, like his predecessor Alan Greenspan, he thought former president George W. Bush’s tax cuts had been appropriate.

The chairman responded:

“I’ve done my best to leave that authority where it belongs, with the Congress.”

What Bernanke didn’t disclose is that back in 2005, while he served as chairman to the president’s Council of Economic Advisers, he was singing a very different tune. In fact, he went so far as to argue in a September 2005 testimony to Congress that the very underpinnings of U.S. economic growth might be compromised if Bush’s controversial tax cut program were not etched into law for good.

Just don’t call them Marxists

BofA Merrill Lynch economist Ethan Harris isn’t buying what he calls ”extreme perma-bear stories” about the U.S. economy. A couple of weeks of disappointing U.S. economic data, culminating in Friday’s weak employment report , revived concerns that the economy was struggling to reach recession escape velocity.

In a research note, Harris said the bad news hasn’t changed his forecast for U.S. economic growth of 3 percent-plus over the next two years. He says the economy has a natural tendency to eventually return to full employment once the “negative shocks” are gone. He points to six major economic theories to support his view, including Keynesian, the Austrian school, and the “financial accelerator model,” which counts Federal Reserve Chairman Ben Bernanke among its advocates. 

But he acknowledges there is one well-known economic theory which does not support his forecast:

Oops, forgot about Bernanke!

U.S. Representative Barney Frank forgot one minor little detail in Thursday’s hearing on overhauling the financial regulatory system — the witness, Federal Reserve Chairman Ben Bernanke.

After Frank and other members of Congress delivered opening statements, Frank launched into a spirited rebuttal of one member’s comments, but was soon interrupted by the committee’s top-ranking Republican, Spencer Bachus.

Bachus: Mr. Chairman, uh, your time has expired. Now if you want to give an additional….