Ben Bernanke Makes a Bold Forecast About Inflation

Ben Bernanke Makes a Bold Forecast About Inflation

Former Federal Reserve Bank Chairman, Dr. Ben Bernanke, is not worried about inflation. Before an audience of over 3,000 Registered Investment Advisors, Financial Planners and Investment Managers at the Schwab Institutional IMPACT Conference in Denver on November 5, 2014, Dr. Bernanke was remarkably confident about the future of tame inflation in the USA for years to come.

He has been widely criticized for executing the Quantitative Easing (QE) programs at the Fed which allows the U.S. central bank to buy longer term bonds in the open market thereby raising their market price and lowering their yield. Many fear that the QE programs already executed will lead to rampant inflation, but after five years since the beginning of QE, inflation is still very tame at 2% or less. Dr. Bernanke speculated that it could be another five years before inflation becomes a problem, and when it does appear, he believes the expanded toolkit now available to the Fed will make future inflation easier to control.

Dr. Bernanke also asserted that the Troubled Asset Relief Program (TARP) invented during the 2008 financial crisis was one of the most successful government programs in the history of the United States while simultaneously being one of the least popular. The TARP loans and asset purchases have been repaid at a significant profit to the U.S. government.

Another controversy is that the Fed allowed Lehman Brothers to fail in 2008 and chose to bail out American International Group, Inc. (AIG). Dr. Bernanke explained that AIG had capital so that it could be rescued while Lehman Brothers had no capital.

Dr. Bernanke is simultaneously proud and humble regarding his legacy as Fed Chairman. He is humble by nature. He is proud that the U.S. economy has the strongest recovery in the world from the 2008/2009 financial crisis, and he is proud that all of his hard work and the hard work of the Federal Reserve Bank staff contributed to this result.

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