Bernanke's Power of Persuasion

Bernanke's top tool now may be power of persuasion

Without any easy options left, Bernanke must try to prevent another recession by persuading people and businesses to feel confident enough about the future to spend more today.

"There's no economy! Um, well, I mean... to go bust of course."

October 27, 2005
Bernanke: There's No Housing Bubble to Go Bust

Fed Nominee Has Said 'Cooling' Won't Hurt

"Deflation: Making Sure "It" Doesn't Happen Here Again!"

November 21, 2002
Deflation: Making Sure "It" Doesn't Happen Here

A particularly important protective factor in the current environment is the strength of our financial system: Despite the adverse shocks of the past year, our banking system remains healthy and well-regulated, and firm and household balance sheets are for the most part in good shape.

Be sure to refresh your memory of his thoughts of Japan. In hindsight, it is quite a read.

The claim that deflation can be ended by sufficiently strong action has no doubt led you to wonder, if that is the case, why has Japan not ended its deflation?

...

First, as you know, Japan's economy faces some significant barriers to growth besides deflation, including massive financial problems in the banking and corporate sectors and a large overhang of government debt.

Shocking. Good thing that's not happening here.

Second, and more important, I believe that, when all is said and done, the failure to end deflation in Japan does not necessarily reflect any technical infeasibility of achieving that goal.

It doesn't necessarily reflect that. It might reflect that. It might not. Nobody really knows.

In the resulting political deadlock, strong policy actions are discouraged, and cooperation among policymakers is difficult to achieve.

No deadlock here. Everyone is completely on the same page about what to do next. 100% unanimous agreement.

August 24, 2010
Fed Split on Move to Bolster Sluggish Economy

WASHINGTON—The Aug. 10 meeting of top Federal Reserve officials was among the most contentious in Ben Bernanke's four-and-a-half year tenure as central bank chairman.

August 25, 2010
With stimulus fading, economy must find its way

There’s not much more help coming from Washington, analysts said. Congress appears deadlocked on economic policy until at least the November election, while the Federal Reserve, which has cut its key interest rate to near zero, appears limited in what else it can do to spark the economy.