Sunday, December 5, 2010

Fed Chairman Bernanke Appeared on CBS' 60 Minutes

On Sunday, December 5, Federal Reserve Chairman Ben Bernanke appeared on 60 Minutes, defending QE2 - the central bank's controversial $600 billion bond buying program. He made headlines over the weekend by not ruling out the possibility that more stimulus could be on the way.

In a rare interview, Federal Reserve Chairman Bernanke talked about the troubled economy and the measures the central bank has taken to improve it. The interview addressed several pressing economic matters, including the high unemployment rate, the prospects of double dip recession, and taxes. He also talked about the federal deficit and reforming the tax code.

Dr. David Krause, AIM program director said, "I though Bernanke was frank about the concerns he has regarding the U.S. economy. He did his best to explain why the Fed announced its intention to buy $600 billion of Treasury bonds and defended against critics who say the move will lead to inflation. While he was strong in defending what the Fed had done to date, I think he was pretty vague about more bond purchases after QE2 is completed. After watching the interview, I don't think his comments this evening will move the markets one way or the other."

Krause continued, "I know the interview was taped on November 30, a day before the Fed was required to comply with rules in Dodd-Frank that forced them to release the names of the financial institutions it lent funds to during the financial crisis at the end of 2008 and beginning of 2009. Some people are still wondering if Goldman Sachs and other banks received preferential treatment and whether it was necessary to bailout AIG. Nevertheless, it was worthwhile viewing because it is important to see how he answered questions and what his body language was saying. I'm confident we are not likely to have runaway inflation and that the Fed will be able to jump on the brakes quickly if prices and costs started skyrocketing."

To see the interview, go to the CBS 60 Minutes link.

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