Bernanke: Economy lacks strength to sustain gains

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(CBS/AP) WASHINGTON — Federal Reserve Chairman Ben Bernanke says the economy still lacks enough spending and investment to sustain its recent gains.

Bernanke says consumer demand remains weak relative to its level before the Great Recession. He notes that other contributors to economic growth — including borrowing and trade — have declined.

His comments provide further insight into the reasoning behind the Fed's plan to hold short-term interest rates near zero through 2014. The central bank has stuck with that timetable despite three months of strong job growth and other signs of economic improvement.

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Bernanke made the remarks during the second of four lectures he is giving to George Washington University students this month.

[notyrants]

From a business standpoint, it would be argued that business wins the game when it cuts the cost of labor, cuts overhead by socializing it amongst all and privatizes it's profits to those who control it at the top and the investors who await the return on their capital. I never really cared much for the game of Monopoly. I may have played it once and watched it played a few times but on those rare occasions I did notice that wealth concentrates into a "winner" and next thing, the game ends and the chips are wiped from the board.

[get_down]

Really? Ben, "the economy still lacks enough spending", you mean after you setting the key bank interest rate close to zero since 2008 and launching several QEX hasn't helped our Economic woes? Soooo you're not a "genius" after all? Wow - that hurts! You want consumer to spend more? (Spend more) With what exactly? You do know due to your own policy - e.g. a 20K bank CD earns less than 5 bucks a month nowadays or don't you?! Actually I think you're just clueless and incompetent all along!

[skeezix06]

Consumer demand is weak because wages/salaries have been cut while cost of living up went. People simply don't have the money to spend on items that are not directly related to actual need. That's not going to change until employers wake up and realize that this particular damage is self-inflicted. If they raise the wages, people will start spending again.

[rightbehind]

Bernanke is sharp and the only FED chairman I think has been credible.

[mtownerman]

C'mon Ben...getting those printing presses rolling man! Time to devalue the US Dollar some more so Americans across the nation can get hit with higher costs of food, energy, gas and so on....

[rightbehind]

Your right! Deflation is really bad. Inflation is the way to go. We need to quit protecting the buying power of the wealthy. This country needs a good healthy dose of inflation.

[vsmit]

You are correct rightbehind. A good dose of inflation will clean out the retirement accounts of those who saved (there will be a government program for those who did not), dilute the massive Obama federal deficit (because the money paid back is worth less than that which was borrowed) and hurt the working poor because pay increases will lag the increase in prices. Inflation will not hurt the wealthy at all. Their investments (stocks, businesses, real estate) will keep up with inflation.

It sometimes amazes me how little people know about economics. All you have to do is look back at Jimmy Carter's massive inflation and look at who that hurt. It wasn't the wealthy.