The Federal Reserve cannot solve all the economy’s problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector.
-Ben S. Bernanke, chairman of the Federal Reserve Board of Governors
The Washington Post has this morning’s must read OpEd, in which Ben Bernanke attempts to explain/justify/rationalize the Fed’s actions, as well as containing a plea for help from Congress:
“Notwithstanding the progress that has been made, when the Fed’s monetary policymaking committee – the Federal Open Market Committee (FOMC) – met this week to review the economic situation, we could hardly be satisfied. The Federal Reserve’s objectives – its dual mandate, set by Congress – are to promote a high level of employment and low, stable inflation. Unfortunately, the job market remains quite weak; the national unemployment rate is nearly 10 percent, a large number of people can find only part-time work, and a substantial fraction of the unemployed have been out of work six months or longer. The heavy costs of unemployment include intense strains on family finances, more foreclosures and the loss of job skills.
Today, most measures of underlying inflation are running somewhat below 2 percent, or a bit lower than the rate most Fed policymakers see as being most consistent with healthy economic growth in the long run. Although low inflation is generally good, inflation that is too low can pose risks to the economy – especially when the economy is struggling. In the most extreme case, very low inflation can morph into deflation (falling prices and wages), which can contribute to long periods of economic stagnation.”
I am not sure who he is speaking to: The new GOP House, the Tea Party, or the American public.
At a certain point, he will merely be creating a diary for future Fed historians. As of now, he seems to be trying to defend the institution against further political oversight and over manipulation — and asking for some help from Congress . . .
What the Fed did and why: supporting the recovery and sustaining price stability
Ben S. Bernanke
Washington Post, November 4, 2010