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Thursday, February 02, 2012 1:35:14 PM
Fed Chief Takes Heat From Republicans
Ben S. Bernanke, the Fed chairman, arrives to testify on the economy before a House panel on Thursday.
By BINYAMIN APPELBAUM February 2, 2012
WASHINGTON — Congressional Republicans criticized the Federal Reserve on Thursday for working to reduce unemployment and revive the housing market rather than maintaining a single-minded focus on inflation.
The Fed’s chairman, Ben S. Bernanke, was sharply questioned by members of a House committee about the Fed’s announcement last week that it plans to hold short-term interest rates near zero until late 2014, a measure that the Fed described as necessary to support a faster pace of economic recovery.
“I think this policy runs the great risk of fueling asset bubbles, destabilizing prices and eventually eroding the value of the dollar,” said Representative Paul Ryan, the Wisconsin Republican who chairs the House Committee on the Budget. “The prospect of all three is adding to uncertainty and holding our economy back.”
Mr. Bernanke was calm and careful in his responses, but he did not back down. He told the committee that the economy, the housing market in particular, would need help for years to come from the Fed and Congress.
Mr. Bernanke repeated the Fed’s assessment, [ http://www.nytimes.com/2012/01/26/business/economy/fed-to-maintain-rates-near-zero-through-late-2014.html ] released last week, that the pace of growth would increase modestly this year, but that the economy still faces significant challenges, including the depressed state of the housing market and the risk that problems in Europe would infect the rest of the world.
In his testimony, [ http://www.federalreserve.gov/newsevents/testimony/bernanke20120202a.htm ] Mr. Bernanke urged Congress in particular to confront “the urgent issue of fiscal sustainability” by enacting a plan to reduce the federal debt.
Mr. Bernanke repeated his familiar caution that Congress should not cut spending or raise taxes too quickly, because doing so could undermine the economic recovery, but said that a credible plan to make such changes in the long term could spur growth by improving the confidence of businesses and consumers.
The hearing was the latest opportunity for Republicans to vent their frustration with the Fed chairman, also a Republican, who in their view is undermining the nation’s long-term financial health in his efforts to spur a short-term recovery.
Congress has charged the Fed with two goals, maintaining price stability and maximizing employment; Republicans are concerned that the Fed’s massive efforts to spur job growth will eventually result in unmanageable inflation.
These concerns were heightened last week by the Fed’s publication for the first time of a formal interpretation of its Congressional mandate. [ http://www.federalreserve.gov/newsevents/press/monetary/20120125c.htm ] The Fed said that it would seek 2 percent annual inflation, and to limit unemployment as much as possible, and that sometimes one goal would be a priority over the other.
“My interpretation is that the Fed is willing to accept higher levels of inflation than your preferred rate in order to chase your unemployment mandate,” said Mr. Ryan. “Is that not what we should interpret out of this?”
Mr. Bernanke responded that the Fed “will not actively seek” to raise inflation but if inflation and unemployment both rose above its targets, it could choose to reduce inflation more slowly in order to reduce unemployment more quickly.
“We are not seeking higher inflation,” Mr. Bernanke said. “We do not want higher inflation and we’re not tolerating higher inflation.”
But Mr. Ryan pressed on, noting this was not a denial.
“I don’t know how else to interpret this — that the result of this balanced approach is that higher-than-preferred inflation may be tolerated,” he said.
Committee Democrats rushed to defend Mr. Bernanke, arguing that the Fed should be focused on unemployment because 24 million Americans cannot find full-time work.
“To deprive you of the tools necessary to boost employment would be a big mistake,” said Representative Chris Van Hollen, the committee’s ranking Democrat. “Indeed, without those tools, the economy today would be in much worse shape.”
Republicans also excoriated the Fed for its publication of a “white paper” [ http://www.federalreserve.gov/publications/other-reports/files/housing-white-paper-20120104.pdf ] last month describing issues that are weighing on the housing market and encouraging Congress and the administration to address those issues.
Representative Scott Garrett, a New Jersey Republican, said the Fed overstepped its bounds by giving unsolicited advice to Congress about fiscal policy.
“You have two mandates in the areas of employment and fiscal policy. That’s obviously a lot,” Mr. Garrett said. “We have a mandate in the area of fiscal policy and we would like to retain that.”
Mr. Bernanke appeared taken aback.
“We are trying to provide useful background. I apologize if it was misinterpreted. Our goal was just to be helpful,” he said.
Under subsequent questioning from Democrats, who asked why the Fed was not taking an even stronger position on housing issues, Mr. Bernanke rallied further, saying that the Fed maintained its opinion that Congress should do more.
“I think it would repay your efforts,” Mr. Bernanke said, “to remove some of the barriers to a recovery in housing.”
http://www.nytimes.com/2012/02/03/business/economy/fed-chief-focuses-anew-on-us-debt.html?ref=business
that's right jerks! KEEP on HURTING the economy WILLFULLY! ...... We SEE YOU!
Ben S. Bernanke, the Fed chairman, arrives to testify on the economy before a House panel on Thursday.
By BINYAMIN APPELBAUM February 2, 2012
WASHINGTON — Congressional Republicans criticized the Federal Reserve on Thursday for working to reduce unemployment and revive the housing market rather than maintaining a single-minded focus on inflation.
The Fed’s chairman, Ben S. Bernanke, was sharply questioned by members of a House committee about the Fed’s announcement last week that it plans to hold short-term interest rates near zero until late 2014, a measure that the Fed described as necessary to support a faster pace of economic recovery.
“I think this policy runs the great risk of fueling asset bubbles, destabilizing prices and eventually eroding the value of the dollar,” said Representative Paul Ryan, the Wisconsin Republican who chairs the House Committee on the Budget. “The prospect of all three is adding to uncertainty and holding our economy back.”
Mr. Bernanke was calm and careful in his responses, but he did not back down. He told the committee that the economy, the housing market in particular, would need help for years to come from the Fed and Congress.
Mr. Bernanke repeated the Fed’s assessment, [ http://www.nytimes.com/2012/01/26/business/economy/fed-to-maintain-rates-near-zero-through-late-2014.html ] released last week, that the pace of growth would increase modestly this year, but that the economy still faces significant challenges, including the depressed state of the housing market and the risk that problems in Europe would infect the rest of the world.
In his testimony, [ http://www.federalreserve.gov/newsevents/testimony/bernanke20120202a.htm ] Mr. Bernanke urged Congress in particular to confront “the urgent issue of fiscal sustainability” by enacting a plan to reduce the federal debt.
Mr. Bernanke repeated his familiar caution that Congress should not cut spending or raise taxes too quickly, because doing so could undermine the economic recovery, but said that a credible plan to make such changes in the long term could spur growth by improving the confidence of businesses and consumers.
The hearing was the latest opportunity for Republicans to vent their frustration with the Fed chairman, also a Republican, who in their view is undermining the nation’s long-term financial health in his efforts to spur a short-term recovery.
Congress has charged the Fed with two goals, maintaining price stability and maximizing employment; Republicans are concerned that the Fed’s massive efforts to spur job growth will eventually result in unmanageable inflation.
These concerns were heightened last week by the Fed’s publication for the first time of a formal interpretation of its Congressional mandate. [ http://www.federalreserve.gov/newsevents/press/monetary/20120125c.htm ] The Fed said that it would seek 2 percent annual inflation, and to limit unemployment as much as possible, and that sometimes one goal would be a priority over the other.
“My interpretation is that the Fed is willing to accept higher levels of inflation than your preferred rate in order to chase your unemployment mandate,” said Mr. Ryan. “Is that not what we should interpret out of this?”
Mr. Bernanke responded that the Fed “will not actively seek” to raise inflation but if inflation and unemployment both rose above its targets, it could choose to reduce inflation more slowly in order to reduce unemployment more quickly.
“We are not seeking higher inflation,” Mr. Bernanke said. “We do not want higher inflation and we’re not tolerating higher inflation.”
But Mr. Ryan pressed on, noting this was not a denial.
“I don’t know how else to interpret this — that the result of this balanced approach is that higher-than-preferred inflation may be tolerated,” he said.
Committee Democrats rushed to defend Mr. Bernanke, arguing that the Fed should be focused on unemployment because 24 million Americans cannot find full-time work.
“To deprive you of the tools necessary to boost employment would be a big mistake,” said Representative Chris Van Hollen, the committee’s ranking Democrat. “Indeed, without those tools, the economy today would be in much worse shape.”
Republicans also excoriated the Fed for its publication of a “white paper” [ http://www.federalreserve.gov/publications/other-reports/files/housing-white-paper-20120104.pdf ] last month describing issues that are weighing on the housing market and encouraging Congress and the administration to address those issues.
Representative Scott Garrett, a New Jersey Republican, said the Fed overstepped its bounds by giving unsolicited advice to Congress about fiscal policy.
“You have two mandates in the areas of employment and fiscal policy. That’s obviously a lot,” Mr. Garrett said. “We have a mandate in the area of fiscal policy and we would like to retain that.”
Mr. Bernanke appeared taken aback.
“We are trying to provide useful background. I apologize if it was misinterpreted. Our goal was just to be helpful,” he said.
Under subsequent questioning from Democrats, who asked why the Fed was not taking an even stronger position on housing issues, Mr. Bernanke rallied further, saying that the Fed maintained its opinion that Congress should do more.
“I think it would repay your efforts,” Mr. Bernanke said, “to remove some of the barriers to a recovery in housing.”
http://www.nytimes.com/2012/02/03/business/economy/fed-chief-focuses-anew-on-us-debt.html?ref=business
that's right jerks! KEEP on HURTING the economy WILLFULLY! ...... We SEE YOU!
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