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December 5, 2010 7:24 PM

Interview with Federal Reserve Chairman Ben Bernanke

By
Overtime Staff
Topics
60 Minutes Overtime

If you think your job is stressful, consider the duties of Ben Bernanke. As Chairman of the Federal Reserve, Bernanke has tremendous influence over America's economy - and that economy has been troubled lately. The recession may have ended, but unemployment remains high and the recovery has been slow. While at Ohio State University, Bernanke talked with Scott Pelley of "60 Minutes" about the challenges still ahead. Here are excerpts from that interview.

Watch Scott Pelley's report.


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by tylerdurden616 April 5, 2011 6:56 PM EDT
"PROOF" that mr bernanke is lying through his teeth. pl;ease take note at the 8:00 minute marke he begins to drive home 2 very important things that QE2 is not.
1.. it is not fiscal policy
2..it is not money printing.

Source: Modern Money Mechanics.
This complete booklet is was originally produced and distributed free by: Public Information Center Federal Reserve Bank of Chicago P. O. Box 834 Chicago, IL 60690-0834 telephone: 312 322 5111

TOP OF PAGE 6
Bank Deposits - How They Expand or Contract
Let us assume that expansion in the money stock is desired by the Federal Reserve to achieve its policy objectives. One way the central bank can initiate such an expansion is through purchases of securities in the open market. Payment for the securities adds to bank reserves. Such purchases (and sales) are called "open market operations."
How do open market purchases add to bank reserves and deposits? Suppose the Federal Reserve System, through its trading desk at the Federal Reserve Bank of New York, buys $10,000 of Treasury bills from a dealer in U. S. government securities.(3) In today's world of computerized financial transactions, the Federal Reserve Bank pays for the securities with an "telectronic" check drawn on itself.(4) Via its "Fedwire" transfer network, the Federal Reserve notifies the dealer's designated bank (Bank A) that payment for the securities should be credited to (deposited in) the dealer's account at Bank A. At the same time, Bank A's reserve account at the Federal Reserve is credited for the amount of the securities purchase. The Federal Reserve System has added $10,000 of securities to its assets, which it has paid for, in effect, by creating a liability on itself in the form of bank reserve balances. These reserves on Bank A's books are matched by $10,000 of the dealer's deposits that did not exist before. See illustration 1.

your honor i rest my case.
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by spikespike9 December 18, 2010 3:15 AM EST
Chopper Benny! You are the biggest surpent in disguise. QE is the biggest theft of wealth on middle class and the Americans. How many jobs will this bring only to pump up elitests and bankers. You will pay for this in this lifetime or the next.
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by Gettysburg7 December 13, 2010 12:19 PM EST
I find it interesting that Ben B. does not acknowledge that it was a Gettysburg Licensed Battlefield Guide who first informed him (in 1999 - 2000) that there would be a global recession in 2008. Ben scoffed at the Battlefield Guide and said he would stack up his MIT PhD against History any day. It looks like History won. We had a wager for lunch - now that your career is doing so well - I believe you owe me that lunch.

Tricia L. Murphy
Former Gettysburg Licensed Battlefield Guide
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by hiddengun December 7, 2010 3:49 PM EST
The cost differences between China & US is just so great that it can't be gracefully compensated or justified by simply injecting $600 billions into the US-world market. We will eventually be bitten by this. Maybe Bernanke's strategy is we will buy less (so less imports) when our cost of living is high enough!!!!! How about exports? Who can afford to but from us since we have the greatest military expenses, outrageous union pensions and least cost-efficient health care service. What a mess that Bernanke can't fix!!!!!
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by gemhudson December 6, 2010 4:08 PM EST
To prosper in ones own business is to go from your rags to your riches. You are building up wealth but produce nothing else for the money. You are not only making the money in the business but going from their rags to your riches is not happening. Printing up to monetize not only the debt is to monetize the spending as well. The dollar depreciate just the same. Spending cheap bucks cost more.
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by beckycs December 6, 2010 12:50 PM EST
I used to be very anti Bernanke, but I have come to believe that he does want to find the solution to this crisis.

However, I think he is misinformed in many areas, lets take where the banks are concerned. They are the ones who are adding lighter fuel to this crisis. Whether it is on purpose or for lack of bravado, they are cutting the throats of small businesses.

These small businesses are the primary engines that fuel the US economy. They are the lifeline that will rescue us by keeping people employed right here in the country, not overseas, like the large corporations,who are sending our jobs out of the country. Mr. Bernanke said, during the interview, that many small businesses were not credit worthy at this point. Go Figure! Of course they can't show a profit in this economy. But when the larger corporations like the banking and auto industry was in crisis, what happened? The government rescued them. Yet the banks are pulling the financing options right out from under the small business person and there is no government rescue set aside to help him or her stay afloat.

A small business person will do everything in thier power to not lay off an employee, because that person is usually also thier friend. Big corporate heads could care less who gets the axe, as long as it is not them and it improves the bottom line.

I know all of this for a fact. My husband and I have been in business for ourselves for sixteen years. It has been excruciatingly difficult to keep it going during this last two years, but we have managed to keep the doors open. We have kept up on our payments to vendors and creditors and just trimmed every ounce of fat and some meat to stay in business. Now the bank, who has re-upped our inventory financing for the last ten years is saying no. They are calling the loan because our bottom line is too weak. What on earth do they expect.

We know we can weather this storm by just keeping on. We have, by the grace of goodness, the customer base to do it and a super relationship with our product suppliers. But the bank has decided that we are not in good financial shape. They are going to pull our fiancial foundation right out from under us and put us completely out of business instead. If we go out, we will be disappointing our loyal customers, one less sales generating force for our venders and product suppliers, one less money generator that will help to keep the money in flow, one less employer and result in one more burden to the unemployment system. We may even eventually be forced to bite the bullet and file bankruptcy.

Multiply our situation by however many other small businesses are in the same situation and we definitely have the makings of a new financial meltdown in this country. Mr Bernanke you are wrong when you say a second recession wave is only possible. A second wave of recession is inevitable if current financial policies are held in place.
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by lukehlee December 6, 2010 5:19 AM EST
Too much talk with no clear solution. It seems Ben Burnanke still doesn't know what to do.

Mr. Pelly, I would like to suggest you take a look at: A Real Market Revolution as a Solution for the Current Economic Crisis - A Reappraisal of Current Forecasts of Upcoming US Federal Deficit and Employment http://t.co/29qDmmT, and forward it to Chairman Bernanke, if possible.
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by ThomasHedin December 6, 2010 12:40 AM EST
Dear Mr. Pelly

Would you consider interviewing Monetary Expert Bryon Dale?

It's obvious that the only tool the Fed wants to use to get the economy rolling is more interest bearing debt. Please take the time to interview Byron Dale for a real solution to this economic and monetary crisis. It will change your life forever.
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by Matt_NY December 6, 2010 1:28 AM EST
The Fed does not borrow money and issue debt. That is the Treasury department. They are unrelated. QE2 is NOT taxpayer money and does NOT increase the deficit or debt in any way. In fact, it will reduce it a bit as the interest will be remitted to treasury.
by s0055d December 5, 2010 10:42 PM EST
I'm seeing big increases in the price of necessities. This man does not know what he is doing. He thinks he's going to inflate his way out of this? He should clue my employer in. Take home pay dropped with curbs on overtime pay, outright benefit removal and insurance increases with co-pay and unpaid (now going towards "deductible") cost increases. No inflation? Where on the moon? They ought to close this guy's
'private bank" and return control of the currency to the treasury, after they sack Geitner, of course!
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by KazVorpal December 9, 2010 4:21 PM EST
The reason your employer is paying you less is that the economy is suffering deflation.

Surely you realize that your employment cost is a "price".

While nominal prices are either stable or, occasionally, rising, people are tending to buy most things "on sale", or buy less (reflecting a change in the supply/demand curve, ergo real pricing).

Bernanke does NOT think he's inflating his way out of this, and he made that clear in the interview:

He has created temporary money in order to compensate for the low money velocity causing this depression. He intends to destroy that money when he sees velocity rise.

He is wrong, and clearly incompetent, thinking that he can magically anticipate WHEN to destroy the temporary money...but he's not trying to be inflationary.
by Ro1A2Mo3 December 5, 2010 10:38 PM EST
If Fed. Reserve chairman Ben Bernanke could find a way to stop jobs from going out of the country by giving big business tax breaks to ship jobs overseas. Bring the jobs back to the USA and the economy will take a jump.
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by Matt_NY December 6, 2010 1:32 AM EST
That is EXACTLY what QE2 is about. If you are angry that China is manipulating its currency, deliberately undervaluing it, so that Chinese products and labor are cheaper, then you should be hugely in favor of QE2. Each time Bernanke does more QE, it makes it harder and more expensive for China to maintain its peg to the dollar. As the yuan gains relative to the dollar (moves to fair market value), Chinese goods get more expensive and American goods (and hence jobs) get more competitive.

China is naturally not happy about QE2. They don't like that Bernanke works for the American people, not China, and that he is pursuing policies that will move jobs back to the US and/or preserve jobs that would move to China.

Germany is upset for the same reason. They also enjoy an undervalued currency due to quirks about the construction of the euro within a non ideal currency zone (no fiscal unity, low labor mobility, etc.) So they call the policy clueless.

Pick your side. If you want jobs in America, side with Bernanke and QE. If you feel bad for the Chinese and Germans who already run a huge trade surplus with us, costing us almost a billion in GDP per year, then by all means join with them and criticize Bernanke.
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