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We’ve talked about this before, the fact that Ben Bernanke is growing increasingly vocal about his scepticism that monetary policy can do much to save this economy.This is a HUGE change from someone who once said that the Great Depression was entirely the Fed’s fault, and that the Fed would never let that happen again!
This was the famous line from the speech he gave at Milton Friedman’s 90th birthday party:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.
In his daily note, Art Cashin caught a key bit from a Ben Bernanke Q&A last night after he gave a speech, further emphasising that Bernanke has radically changed his views.
A Plaintive Plea From Mr. B? – Chairman Bernanke spoke in Cleveland at 5:00 (EDT) last night. The speech was interesting but it was the Q&A that produced the stir. Here’s a bit from an AP report on the event.
WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke said Wednesday that long-term unemployment is an American “national crisis” and suggested that Congress should take further action to combat it. He also said lawmakers should provide more help to the battered housing industry.
Bernanke noted that about 45 per cent of the unemployed have been out of work for at least six months.
“This is unheard of,” he said in a question-and-answer session after a speech in Cleveland. “This has never happened in the post-war period in the United States. They are losing the skills they had, they are losing their connections, their attachment to the labour force.”
He added: “The unemployment situation we have, the job situation, is really a national crisis.”
Bernanke said the government needs to provide support to help the long-term unemployed retrain for jobs and find work. And he suggested that Congress should take more responsibility.
There was even a line that might be seen as a cross between “I’ve done my job” and “we’re plumb out of bullets”.
“Monetary policy can do a lot, but monetary policy is not a panacea,” Bernanke said.
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