Let no one accuse Fed chief Ben Bernanke of being too dramatic.
Bernanke made his latest case for more monetary stimulus in a speech in Boston Friday, focusing on what the Federal Reserve can do to get the economy going at a time when interest rates are near zero.
In setting up the argument, Bernanke notes the high inflation that prevailed a few decades ago and the contrast with the current situation, in which interest rates are near zero in all the developed economies. That creates “complications” for policymakers, he said.
He then makes what might be the understatement of the year when it comes to describing the troubles the Fed and other central bankers are encountering.
While the financial meltdown was caused by many factors, it’s clear that the low interest rates under Bernanke’s predecessor, Alan Greenspan, were a big contributor to the world’s embrace of leverage. What does Bernanke have to say about that?
“Monetary policymaking in an era of low inflation has not proved to be entirely straightforward,” Bernanke said.
You don’t say.