Today I had the chance to attend the House
Financial Services Committee, the only committee that my boss currently
services on. I always love to attend the committee because I get to see my boss
in action, but today was an especially unique opportunity because the Federal
Reserve Chairman, Ben Bernanke was the sole and primary witness at the hearing.
As a student who is interested in economics, I was eager to attend and listen intensely
to Mr. Bernanke speak on all things Macro related.
What made this an even more unique opportunity was the fact
that this may have been Chairman Bernanke’s last appearance in front of the
Financial Services Committee (or any committee for that matter). Nearly a month
ago, President Obama had hinted at the possibility of Chairman Bernanke leaving
the Federal Reserve when his term ends in January 2014. This came after
Bernanke announced he would skip the Fed’s annual August conference in Jackson
Hole, Wyoming, an event he regularly attends.
Today’s committee hearing was on the monetary policy and state of the economy. As required by law, the Federal
Reserve must present semi-annual reports to Congress on the state of the U.S.
economy and the nation’s welfare. In these reports, the Chairman of
the Federal Reserve discusses the strengths and weaknesses of the economy,
along with the policies currently in use by the Federal Reserve.
Essentially the Federal Reserve has three main responsibilities in our
economy:
1. Regulate banks and ensure health of banking system.
2. Control money supply (monetary policy) through open market operations.
3. Prevent bank runs (a simultaneous attempt by depositors to withdraw money from a bank because they think it will fail).
With unemployment still high and declining only gradually, and with inflation running below the Fed’s long-run objective, Bernanke announced that a highly accommodative monetary policy will be in use for the foreseeable future.
Bernanke’s thoughts on the economy were simply this. Despite the 0.1% improvement in the unemployment rate, it remains well above its longer-run normal level, and rates of underemployment and long-term unemployment are still too high. Recovery is still proceeding at a moderate pace and the economy remains vulnerable to unexpected shocks. One bright spot in the economy has been in the housing market, where house sales in 2012 were the highest in five years.
1. Regulate banks and ensure health of banking system.
2. Control money supply (monetary policy) through open market operations.
3. Prevent bank runs (a simultaneous attempt by depositors to withdraw money from a bank because they think it will fail).
With unemployment still high and declining only gradually, and with inflation running below the Fed’s long-run objective, Bernanke announced that a highly accommodative monetary policy will be in use for the foreseeable future.
Bernanke’s thoughts on the economy were simply this. Despite the 0.1% improvement in the unemployment rate, it remains well above its longer-run normal level, and rates of underemployment and long-term unemployment are still too high. Recovery is still proceeding at a moderate pace and the economy remains vulnerable to unexpected shocks. One bright spot in the economy has been in the housing market, where house sales in 2012 were the highest in five years.
- Nathan Piper
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