Photo: Medill DC (Flickr)
Federal Reserve Chairman Ben Bernanke defended the Federal Reserve’s ongoing effort to foster economic growth by buying mortgage-backed securities and keeping short-term interest rates low. He spoke Monday to the Economic Club of Indiana.
Bernanke says the economy is expanding, making another recession unlikely, but says it is not growing fast enough. He says the longer slow growth continues, the more unemployment problems it creates.
“The more people we’re going to have whose skills are going to atrophy, whose ability to find work is going to decline, and we’ll be creating a permanent group of people who are not fulfilling their full potential in the labor force,” he says.
Bernanke says the Fed cannot solve the problem on its own.
“Monetary policy is no panacea,” he says. “It can be used to support stronger economic growth in situations, as today, in which the economy is not making full use of its resources.”
Bernanke says other solutions include reforming the tax code, making the federal budget sustainable and expanding international trade.