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The somewhat gloomy testimony Ben Bernanke provided to the Senate Banking Committee caused the stock market to drop, and generally didn't inspire confidence.  However,

A couple of things our Chairman said during his testimony caught my attention.

First:

An important drag on household spending is the slow recovery in the labor market and the attendant uncertainty about job prospects. After two years of job losses, private payrolls expanded at an average of about 100,000 per month during the first half of this year, a pace insufficient to reduce the unemployment rate materially. In all likelihood, a significant amount of time will be required to restore the nearly 8-1/2 million jobs that were lost over 2008 and 2009. Moreover, nearly half of the unemployed have been out of work for longer than six months. Long-term unemployment not only imposes exceptional near-term hardships on workers and their families, it also erodes skills and may have long-lasting effects on workers' employment and earnings prospects.

And then:

My colleagues on the Federal Open Market Committee (FOMC) and I expect continued moderate growth, a gradual decline in the unemployment rate, and subdued inflation over the next several years. In conjunction with the June FOMC meeting, Board members and Reserve Bank presidents prepared forecasts of economic growth, unemployment, and inflation for the years 2010 through 2012 and over the longer run. The forecasts are qualitatively similar to those we released in February and May, although progress in reducing unemployment is now expected to be somewhat slower than we previously projected, and near-term inflation now looks likely to be a little lower. Most FOMC participants expect real GDP growth of 3 to 3-1/2 percent in 2010, and roughly 3-1/2 to 4-1/2 percent in 2011 and 2012. The unemployment rate is expected to decline to between 7 and 7-1/2 percent by the end of 2012. Most participants viewed uncertainty about the outlook for growth and unemployment as greater than normal, and the majority saw the risks to growth as weighted to the downside. Most participants projected that inflation will average only about 1 percent in 2010 and that it will remain low during 2011 and 2012, with the risks to the inflation outlook roughly balanced.

And finally in responding to a question from Senator Dodd, regarding small-scale federal stimulus he stated:

"I would be reluctant to withdraw that support too precipitously in the near term," . . . "At the same time, to maintain confidence and keep interest rates low, it’s important that we have a strong and credible plan to reduce deficits over the coming years."

I'm not an economist, but I translate these comments as follows:  (1) the job market is completely crappy right now; (2) the job market may become slightly less crappy in the future, but for the next 2 1/2 years it will still be pretty crappy; (3) yes, the deficit needs to be addressed over the long term, but in the short term you're stupid if you withdraw small scale stimulus (like unemployment extensions that provide spending money to consumers who immediately spend it on things produced by our consumer-dependent economy).

The next time an unemployment extention comes up for a vote, I'm expecting to hear the same senators repeat the same BS about how extending unemployment benefits gives those lazy unemployed people an excuse to delay going back to work even longer.  Maybe they should listen to Chairman Bernanke:  There are nowhere near enough jobs, and pumping more money through the economy with unemployment payments to people who can't find jobs, and need to spend the money immediately, will help.  These same senators took Chairman Bernanke at his word when he said it was necessary to spent trillions to shore up the banks and brokerage houses, why not listen to him now?

Originally posted to Tailfish on Wed Jul 21, 2010 at 05:57 PM PDT.

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Comment Preferences

    •  You forgot the best part of the testimony... (1+ / 0-)
      Recommended by:
      jimreyn

      The Federal Reserve will print, print and print some more to ensure that the banksters feel no pain. Bernacke is a psychopath and will destroy this country to make sure that Wall Street owns everything before this is over

  •  Thank you for translating Bernanke-speak (6+ / 0-)

    (1) the job market is completely crappy right now; (2) the job market may become slightly less crappy in the future, but for the next 2 1/2 years it will still be pretty crappy; (3) yes, the deficit needs to be addressed over the long term, but in the short term you're stupid if you withdraw small scale stimulus (like unemployment extensions that provide spending money to consumers who immediately spend it on things produced by our consumer-dependent economy).

    I wish Bernanke and others of his ilk could know what it feels like to be out of work, hungry, and desperate.

    Yes, I'm het, but I'm NOT a Mad Hetter!

    by Diana in NoVa on Wed Jul 21, 2010 at 06:03:26 PM PDT

  •  The Senators only want to hear what helps their (2+ / 0-)
    Recommended by:
    jimreyn, American Idle

    interests and lobbyist powers to be.

  •  Correct me if I am wrong, but in the olden days (2+ / 0-)
    Recommended by:
    jimreyn, Tailfish

    didn't the Federal Reserve have a mandate to pursue policies that would support full employment? The Humphry Hawkins Act, Full Employment and Balanced Growth Act, was passed in the late 70's. What happened to that?

    I also seemed to recall talk about what unemployment rate constituted "Full Employment." First it was 3%, then 4%. Did they keep raising the target?

    If you are older than 55, never take a sleeping pill and a laxative at the same time!

    by fredlonsdale on Wed Jul 21, 2010 at 06:34:41 PM PDT

    •  Yes (1+ / 0-)
      Recommended by:
      jimreyn

      The Fed actual has two mandates in the law - low unemployment and low inflation.  You could argue about whether it's been focusing on those.

      I'm not sure there's a set definition of "full employment" - I think it's lower than 100% and probably in the 3-4% range you noted.

      •  If the Fed... (0+ / 0-)

        ...concentrated exclusively on sound money, employment would follow (eventually). It's always the willingness to extend and pretend by forcing unsustainable situations into the future that causes problems.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Wed Jul 21, 2010 at 07:56:54 PM PDT

        [ Parent ]

        •  I do not agree..... (0+ / 0-)

          Money is supposed to be a store of value. A $100 bill today should be worth the same tomorrow or next week or next year in terms of purchasing power. (I am assuming you can invest the money as opposed to keeping it under the mattress.) That is what I would call a sound money.

          Employment, total employment, or the unemployment rate can fluctuate up or down even with sound money.

          If you are older than 55, never take a sleeping pill and a laxative at the same time!

          by fredlonsdale on Thu Jul 22, 2010 at 11:10:39 AM PDT

          [ Parent ]

  •  Well that turned out to be disappointing, (0+ / 0-)

    fron the title, I thought he might be out of his job . . . .

  •  You didn't call attention to this bit: (1+ / 0-)
    Recommended by:
    Sparhawk

    "At the same time, to maintain confidence and keep interest rates low,

    That isn't increasing borrowing by small businesses, because the banks won't lend to them. The purpose of that is to force investors into speculating on Wall Street since the rates on C.D.s now have a negative return compared to inflation.

    That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt -

    by enhydra lutris on Wed Jul 21, 2010 at 07:01:54 PM PDT

  •  Older workers pushed out of the workforce (1+ / 0-)
    Recommended by:
    marina

    Starting in about 1998 private industry begain moving people older than 50 out of the workforce.  The results of this slow moving tsunami are becoming apparent.  Bernanke is right, as the older workers will not get jobs.  The reduction of the unemployment ate will come as they reach 66 and start Social Security.  Some will start Social Security early at age 62 with fewer benefits.  Others will go on disability if they have a medical problem.  So the question still remains: when are policymakers and lawmakers going to address the problem of getting people over 50 into jobs when employers are refuding to hire them?

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