I returned home from my soccer game at 11:30pm last night, and found an interesting email. A friend of a friend is involved with the Bernanke testimony today, and had asked "If you could ask any 2-5 questions under oath, what would they be?"
Unfortunately, I didn't have time to come up with anything thoughtful, although two of my friends came up with what I thought were pretty good sets of questions.
1. Do you believe that a sustained period of low (short-term) interest rates can create asset-bubbles, and does the Fed see any evidence of such bubble forming as we approach 2.5 years of near zero short-term rates? If "no" to evidence, how are you monitoring this risk and what would signal to you the early stages of such bubble? If "yes"to evidence, how does the Fed identify such bubbles?2. If inflation stays muted, at what level of unemployment would the Fed start raising its target ?3. What fiscal policies would he recommend to the Congress to maximize short and long-term economic recovery?
From the other:
1) We have had near zero interest rates for 2 1/2 years and there is no sign that will change in the near-term. What are the repercussions of near zero interest rates for 3+ years?
2) What is the new level of "full" employment? How long will it take us to get there?
3) You are only charge in monetary policy, but what would you suggest if you had any influence on fiscal policy to maximize the economic health of our nation?
What would you have asked BB?