It’s time to smack your head, shiver and roll your eyes once again.
Former Federal Reserve Chairman Ben Bernanke has launched a blog, where he will opine on economics, finance and sometimes baseball. The inflationist, who is also a fellow at the Brookings Institute, will share his opinions and insights into a wide variety of economics and financial matters generating headlines.
Here is Bernanke’s statement on his new blog:
“On January 31, 2014, I left the chairmanship of the Fed in the capable hands of Janet Yellen. Now that I’m a civilian again, I can once more comment on economic and financial issues without my words being put under the microscope by Fed watchers. I look forward to doing that—periodically, when the spirit moves me—in this blog. I hope to educate, and I hope to learn something as well. Needless to say, my opinions are my own and do not necessarily reflect the views of my former colleagues at the Fed.”
Bernanke’s first blog post was on interest rates and how important it was for him and other central bankers to hurt retirees who depend on the returns they generate on their accumulated savings. Here is what he wrote on criticisms he received about this zero percent interest rate policy:
“A confused criticism often heard is that the Fed is somehow distorting financial markets and investment decisions by keeping interest rates ‘artificially low.’ Contrary to what sometimes seems to be alleged, the Fed cannot somehow withdraw and leave interest rates to be determined by “the markets.” The Fed’s actions determine the money supply and thus short-term interest rates; it has no choice but to set the short-term interest rate somewhere. So where should that be? The best strategy for the Fed I can think of is to set rates at a level consistent with the healthy operation of the economy over the medium term, that is, at the (today, low) equilibrium rate. There is absolutely nothing artificial about that! “
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