Federal Reserve Chairman Ben Bernanke spoke in Indianapolis last week, and I was lucky enough to sit with a group of smart folks during his talk. I found three elements particularly interesting.
First, Bernanke does not believe that we are in a recession. While I and a growing number of my colleagues think we are either in or at the cusp of one, the more relevant point is that the current level of economic growth is slow enough to make us worse off, not better. That leads to his second point.
Bernanke defended current and past Fed actions, most especially the decision to keep interest rates low and money supply high while unemployment rates and a general economic slowdown threatened.
He also defended some new policy innovations (QE3 and operation twist). The details are too long for this column, but suffice it to say, he reiterated that monetary policy was not a panacea for our economic woes. He singled out our unsustainable public debt, a poor tax code and educational issues as areas for which more long-term focus was needed. These items should not be news to readers of this column, and it is refreshing to hear them repeated.