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 Ben Bernanke 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.
from one:
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 overnight rates?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?
-KD
8 comments:
What's your S&P target in order to create a wealth effect?
Which time periods (in the US or in other countries) are the best historical comps to the economic and fiscal situations that we face today? What lessons have you taken from these past experiences?
Understanding that we have the benefit of hindsight now, can you tell us what your criticisms of Greenspan’s policies? Were his policies optimal? With the data that he had *at that time*, would you have made the same decisions? What should have been done differently?
Understanding that we have the benefit of hindsight now, can you tell us what your criticisms of Volcker’s policies? Were his policies optimal? With the data that he had *at that time*, would you have made the same decisions? What should have been done differently?
If the US experiences stagflation, can you tell us what would be the key data sets that you would look at and what would be the key things that would drive your response to stagflation? Specifically, what would matter the most to you?
Like all people in roles of grand influence, you have a lot of critics. What aren’t your critics “getting”? Specifically, what do they need to understand more? What have you learned from your critics recently?
So Many Questions.
Does the Way the Fed currently measure CPI, does that in your humble opinion understate inflation?
Will the Fed act quickly to stop unwanted advances in CPI?
Will the Fed be behind the curve in handling upward advances in CPI?
Does the Fed think they are monetizing debt?
In question 1a, as far as the Fed identifying bubbles... I'm sure they try behind the scenes, but do we really want it public policy that the Fed is actively monitoring public markets for bubbles and attempting to act against them? What could the Fed have done to curb people's enthusiasm for tech stocks (at the same time that tech was the new wave), what could they have done to convince individuals that real estate was overvalued, what could they have done to stop money managers from chasing yield? The only answer that comes close? DON'T MAINTAIN LOW RATES FOR LONG PERIODS OF TIME!!!!!!! So, maybe they are acting to identify them. After all, they are creating them.
Dear Ben,
The continued low interest rate environment seems to be having little affect on the residential housing market and job creation.
1) Is this as expected (by the FED -- i.e. you)? If not as expected, what were your expectations, in detail.
2) When the current low interest rate environment ends, what is the expected speed at which the FED will act?
3) Is it indeed time to institute a minimal stepup of short term rates? If not, when?
FYI, BB's response to all of your questions would be "Buy the f'kin' dip."
Does Ben understand the criticism insinuated in the rhetorical tag "the Bernanke/Greenspan Put"?
In other words, does Ben think there is any justification to the accusation (from people like James Grant & David Einhorn) that the Fed is only concerned with falling asset prices, not with rising asset prices?
During the most recent Fed meeting, what topic lead to a call for a coffee break?
http://www.salon.com/technology/how_the_world_works/2011/01/14/alan_greenspan_housing_bubble_coffee_break
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