I was too busy on a panel talking about monetary policy yesterday to take note of Ben Bernanke’s congressional testimony, but it once again included a key point that deserves much more attention in the policy debate. Bernanke said, repeatedly, that he believes there are additional steps that he could take to bolster real growth and that he remains at the ready to unleash those steps if he thinks conditions warrant.
In other words, whatever it is that people who aren’t named “Ben Bernanke” think is standing in the way of the Fed reducing the unemployment rate, Ben Bernanke thinks that nothing is standing in his way other than his own relative lack of concern with the fate of jobless people.
His view is that he could do more, and that if the situation gets worse he may do more, but that he doesn’t regard a years-long period of mass unemployment as that big a problem. He’s more concerned with preserving the Fed’s credibility at capping consumer price increases at a two percent annual level. That’s his personal judgment. Better for millions to stay unemployed than for them to start commuting to work and moving out of their parents’ basement, pushing up oil prices and rents. It’s a perverse judgment in my view, but nobody on the Hill wanted to directly challenge it.