Bernanke: No Comparison Between Now & Great Depression

[rdgmail]

My favorite part: "Let's put that out of our minds."


3:05 PM ET 12/1/08 | Dow Jones

WASHINGTON (Dow Jones)--On the same day the U.S. was officially declared to be in a recession, Federal Reserve Chairman Ben Bernanke said Monday there's no comparison between economic conditions now and those that prevailed during the Great Depression.

"Let's put that out of our minds," Bernanke said in response to questions following a speech in Texas.

Still Bernanke, an expert on the Great Depression, said there are some lessons to be drawn how policymakers responded to the Great Depression.

"We have learned from that experience that monetary policy has to be proactive and supportive of the economy," Bernanke said, noting that interest rates had been raised heading into that prolonged downturn.

The other mistake policymakers made back then, he explained, was to allow the financial system to collapse.

The Fed's response this time has, in contrast, been much more aggressive both in cutting interest rates and in supporting the financial system. "I make my own mistakes," Bernanke explained, adding he doesn't like to repeat someone else's.

Earlier Monday, the National Bureau of Economic Research, an academic group that determines when recessions occur based on a series of indicators, officially declared that the U.S. is in fact in a recession that began last December.

In the question-and-answer session, Bernanke also said the too-big-to-fail problem "is not an acceptable situation," and said officials "need to make sure that this doesn't happen again."

Bernanke also said the Fed's credit programs have been effective, and said they are safe from a credit perspective.

The Fed may even make some money on the programs, Bernanke said.

-By Brian Blackstone; Dow Jones Newswires; 202-828-3397; brian.blackstone@dowjones.com

[lurker]

Re: Bernanke: No Comparison Between Now & Great Depression

The lady doth protest too much, methinks.

[Slimprofits]

Re: Bernanke: No Comparison Between Now & Great Depression

The lady doth protest too much, methinks.

I'd bet that Bernake would say that he was referring specifically to deflation spiral conditions.

[tsetsefly]

Re: Bernanke: No Comparison Between Now & Great Depression

My favorite part: "Let's put that out of our minds."

"We have learned from that experience that monetary policy has to be proactive and supportive of the economy," Bernanke said, noting that interest rates had been raised heading into that prolonged downturn.

The other mistake policymakers made back then, he explained, was to allow the financial system to collapse.

The Fed's response this time has, in contrast, been much more aggressive both in cutting interest rates and in supporting the financial system. "I make my own mistakes," Bernanke explained, adding he doesn't like to repeat someone else's.


Bernanke also said the Fed's credit programs have been effective, and said they are safe from a credit perspective.

The Fed may even make some money on the programs, Bernanke said.

Those are my favorite parts, especially "Bernanke also said the Fed's credit programs have been effective, and said they are safe from a credit perspective." and "The Fed may even make some money on the programs, Bernanke said."


does he have any credibility left?

[don]

Re: Bernanke: No Comparison Between Now & Great Depression

My favorite part: "Let's put that out of our minds."

Will the jury please disregard that remark....

[GRG55]

Re: Bernanke: No Comparison Between Now & Great Depression

So what should he have done? Resign and head back to Princeton maybe?

Let's face it, the Fed's policy alternatives, once it has allowed the problem to develop to maturity, are limited. And this Fed has gone beyond its legal mandate [well beyond, some would say] in its efforts to halt the slide.

So if any of you were in Bennie's shoes, what would you be doing today to maintain the Fed's credibility and address the situation? Somebody asked EJ this question some time ago and he crafted a response [iirc, option 1 was to decline the job ]. What would all the critics above suggest now?

btw; EJ has also repeatedly made the point that this is not like the Great Depression, so Bennie has good company.

[The Outback Oracle]

Re: Bernanke: No Comparison Between Now & Great Depression

Start the process of fixing the problems rather than exacerbating them. Sorry, GRG as you say, these problems are already baked in the cake. Effectively what is being done by the FED and all other Central Banks and Governments is to turn the heat up!!! By the time they are finished, our economies and our civilisation will be burned to a crisp and good for nothing.

[GRG55]

Re: Bernanke: No Comparison Between Now & Great Depression

...By the time they are finished, our economies and our civilisation will be burned to a crisp and good for nothing.

From what I've been told it won't make much difference. If the Fed and Paulson don't do it to us, then global warming will. Same result, non? :rolleyes:

[makkie]

Re: Bernanke: No Comparison Between Now & Great Depression

I wouldn't like to be in B's shoes either.

But this phrase is a hint of the market-psychology-manipulation-game the fed plays for years.

My favorite part: "Let's put that out of our minds."

(And then again, sometimes is a stick just a stick and nothing else, Mr Freud )

[tsetsefly]

Re: Bernanke: No Comparison Between Now & Great Depression

So what should he have done? Resign and head back to Princeton maybe?

Let's face it, the Fed's policy alternatives, once it has allowed the problem to develop to maturity, are limited. And this Fed has gone beyond its legal mandate [well beyond, some would say] in its efforts to halt the slide.

So if any of you were in Bennie's shoes, what would you be doing today to maintain the Fed's credibility and address the situation? Somebody asked EJ this question some time ago and he crafted a response [iirc, option 1 was to decline the job ]. What would all the critics above suggest now?

btw; EJ has also repeatedly made the point that this is not like the Great Depression, so Bennie has good company.

Not make the problem worse(ie. print money), be honest about what lies ahead (transparency would help the markets more than any rescue plan they can come up with)
Definitely not overstep my legal boundaries.

Whats done is done, the fed can only make the situation worse, and that is what they are doing...