Fed Chair Bernanke Defends Bond Purchases

Before House Budget Committee

By Children’s Home Society of Florida Foundation

Join Our Mailing List 

Federal Reserve Chair Ben Bernanke appeared on February 9 before the House Budget Committee. He defended the plan by the Federal Reserve to purchase another $600 billion of government bonds. This would bring the total holdings of the Federal Reserve to approximately $2.6 trillion. Previously, the Federal Reserve lowered interest rates close to zero and purchased $1 trillion of bonds to support the financial markets.


Chairman Bernanke pointed to four factors that in his view justified the additional bond purchases.

First, the unemployment level continues to be approximately 9%.

Second, he expects unemployment to remain high and inflation to remain low “for some time.”

Third, it is likely the federal funds rate will remain quite low as long as there is high unemployment and low inflation.

Fourth, the initial purchase of $1 trillion of bonds and the proposed additional $600 billion bond purchase are both appropriate and manageable. He suggests that there will be opportunity “to tighten monetary policy when needed.” The Federal Reserve has sufficient capability to sell the bonds and reduce its holdings as needed.

Fiscal Policy

Chairman Bernanke also addressed fiscal policy. He noted that it is important “to put the budget on a sustainable trajectory.” Chairman Bernanke spoke approvingly of the plans advocated by the National Commission on Fiscal Responsibility and Reform. He suggested that there is now a “much-needed conversation” on the deficit.

Paul Ryan

House Budget Chair Paul Ryan (R-WI) agreed that it is important to address the deficit. He observed that the projected $1.5 trillion deficit this year would increase the publicly-held debt. That public debt was 40% of the economy in 2008 and will rise to 69% of the economy by the end of the year.

Chairman Ryan stated, “Endless borrowing is not a strategy. We must restore the foundations of economic growth – low taxes, spending restraint, reasonable regulations and sound money – to help restart the engines of economic growth and job creation.”

Chris Van Hollen

The Ranking Member of the House Budget Committee is Rep. Chris Van Hollen (D-MD). He indicated to Chairman Bernanke, “I commend you and your colleagues at the Fed for using various forms of monetary policy to promote maximum employment and stable prices.” However, Rep. Van Hollen also agreed that it is important to create “a responsible plan to bring down and then eliminate the primary budget deficit.”


And so, your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com and http://www.springerpub.com/Search/marcinko

Our Other Print Books and Related Information Sources:

Health Dictionary Series: http://www.springerpub.com/Search/marcinko

Practice Management: http://www.springerpub.com/product/9780826105752

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest ME-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Sponsors Welcomed: And, credible sponsors and like-minded advertisers are always welcomed.

Link: https://healthcarefinancials.wordpress.com/2007/11/11/advertise

Product DetailsProduct DetailsProduct Details       

Product Details  Product Details

%d bloggers like this: