“We were fine with bad actors getting their just deserts, but we believed it was better to postpone the verdict on blame and guilt until the fire was out”. Reasonable people can disagree on whether the economy is at full employment. None of that has happened.
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Further recovery must come more from old-fashioned productivity than monetary intervention, he said.
He says that the public outcry over the Fed’s decision to bail out Wall Street stems from a misunderstanding and that the Fed did not do a good job clarifying its actions. At the time, the unemployment rates in Europe and the USA were 10.2% and 9.4%, respectively. But Fed officials were anxious about the consequences of leaving Citi at the altar.
“That’s why I often said that monetary policy was not a panacea – we needed Congress to do its part”.
“We were so focused on trying to fix the problems, stabilize the system”, Bernanke said. “The fact that the Fed is the only game in town means the Fed has to do too much”. As a country, we need to do more to improve worker skills, foster capital investment and support research and development. Page asked Bernanke. “Should somebody have gone to jail?”
Bernanke who had been constantly tweeting about his new book, “The Courage to Act: A Memoir of a Crisis and Its Aftermath”, while making promotion rounds on twitter. The Fed and Bernanke have been criticized by a few for exacerbating income inequality, one of America’s biggest economic issues.
“If there are bad actors, you should go after them” individually, he said.
Why am I bringing this up? Gundlach joins Bill Gross, the former bond king, in warning of a rout in stocks and other risk assets. One federal judge with jurisdiction over Wall Street has consistently expressed his frustration with wrist-slaps of corporations while their executives go free.
Inflation, which is running below the Fed’s target, has also been a point of contention among critics of the Fed. He steps down from the Fed on December. 31 and is not a voting member of the FOMC this year. Kocherlakota has repeatedly argued for a delay in rate liftoff.
“Future negotiations could be jeopardized if the government refused to honor the agreement with Citi that it had helped to arrange”, Bernanke says in the book.
Bernanke explained that he doesn’t see any reason as to why the United States central bank to rush into a decision to raise rates. Unfortunately, what he said is very near to the truth. “That is not obvious, I don’t think everybody would agree to that”, he added in an interview with CNBC.
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Will the Fed consider negative rates anytime soon? “Fuld and his team seemed in denial about how badly their bets had gone wrong”.
