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But I I am curious going back to my previous point we have interest rates almost -- -- we had.
Terrible housing figures that came out today on existing homes which of course were worse than expected.
And every week we get these historically low mortgage rates the lower rates are moving the market they're not moving the immature in housing.
And they don't seem to be moving the money out of the banks it does seem to be more of that uncertainty factor that you talked about.
That seems to me to be out of the hands of the Fed and into the hands of congress.
Well that is a very good question.
I think the Fed has been quite clear that we're gonna keep rates low for -- prolonged an extended period.
We did expand our balance -- you know David to a significant degree above two trillion dollars.
-- do think there's a lot of uncertainty in terms of the fiscal authorities.
That's not an area I have or Ben Bernanke here that -- Central Bank has a responsibility for and I think greater clarity there would help.
Again move the transmission mechanism so that a lot of that -- as the buildup to war.
In employing American workers.
At a time when inflation is not the immediate threat.
But rather the real problem is significantly higher unemployment and a lack of confidence in American businesses and -- in American consumers.
If we don't have jobs we don't have consumption we don't have consumption we don't have final demand if we don't have final demand.
You cannot grow your sales and you cannot in the end ultimately grow your earnings from your company's.
And create more profits and create more jobs and have prosperity.
So that's the transmission mechanism and that the real issue is would further accommodation by the Fed.
Enhance the transmission mechanism or some mechanism itself holding back how efficient our monetary tools can be.
And this is a subject I think needs to be considered.
Over a longer term time frame.
But I do want to remind you I do think we did a good job.
Again we've gone from on the precipice to having his.
Built of of cash and liquidity and banks -- corporations and we have I think I think we deserve some credit.
And chairman Bernanke deserves enormous amount of credit for leading us back from the edge.
Now the question is what happens next and that's a subject that'll be constantly -- -- absolutely absolutely the credit where credit is do you mentioned that you don't see inflation at the moment do you -- You know to Dallas fed we are an -- ball like.
Everything we do in Texas but we calculate.
What's known as the trimmed mean on the personal consumption expenditures the PC.
And the twelve month -- rate is running at one point 4% and our last constellation based on the last PC numbers so.
There's always a risk of deflation -- choice -- tail risk of inflation and deflation.
Right now -- in the 1% plus range and I'm not -- comfortable with that.
However we do have a duty to make sure we don't slip to the deflationary side nor that we create the conditions it would create long term inflationary.
Fires that -- we know are very destructive -- Presently.
I think from a price standpoint that it's not the issue the real issue is how effective can only be in creating jobs without.
Stirring the embers of inflation long term.
Or in somehow conducting ourselves that might lead to less consumption and therefore -- -- tripwire for deflationary actions by consumers.
You have been a very good father to raise four kids none of whom you relied too much on their credit cards -- told.
Your favorite phrase from Shakespeare is never lender bar -- B of course.
Our federal government is going -- -- precisely the opposite direction of your advice.
How would you advise.
Congress to get out of the jam that we we are now -- Some people say that that.
Tax cuts are just the same -- spending other people say that's ridiculous that's.
When you when you cut taxes you're giving the private sector.
More ability to do with that money what they wish in the air for more add child -- the federal government where do you fall down on how to balance -- -- Well David again I'm a central banker we elect people to do -- we elect Democrats Republicans independents to get that done they're the people have to make that decision.
The congress has control the purse strings.
So I'm hesitant to give advice there but clearly whatever they do.
At this particular time.
Should not be constructed so that undermines confidence of the people that create jobs for workers and that's small businesses and businesses.
And women and men of middle managers for the ones who make the decisions.
To decide who will be employed and who will not and when they will employ people.
So I think -- the main thing and yelling match I would give it to congress is again that's not my business.
Is to make sure they don't do anything have further undermines confidence at a very fragile time is Ben Bernanke is when a very uncertain time.
And we have to make sure.
That we didn't not penalize the people that actually are the job creators in America which is private business that's what makes this country work.
As he entrepreneurial genius that has propelled us for the levels of prosperity no one's ever seen.
And we have to get back on that path they must decide what the right mix between spending.
And taxing it is one thing I do know.
We have to deal of these long term unfunded liabilities.
Medicare and social security and so on.
In order to restore confidence in the next generation of consumers.
My children your wonderful young son David -- in the Marine Corps they have to have cops in the future.
In order for them to spend more money and invest in their future and right now there is something of -- -- about and I just want to make sure that the Central Bank doesn't become part of that and I don't believe we have become part of and we're working very hard not be party to them.
Of there there are some critics always out there could say that the Fed.
Behaves in a very reactive way is that a fair assessment do you think the Fed should be more active.
Now I'd just he's a hockey analogy here Wayne Gretzky one of my affairs today I -- try to -- ahead of the puck.
Well we do our very level best to -- ahead of the -- is a contemplate of atmosphere these are serious people.
We're trying not to react tonight I've yet to see evidence and I've been doing this now with the committee first under mr.
Greenspan now under mr.
Little over five years.
None of us are trained that way we don't want to be there we try to anticipate what's coming down the path.
And sometimes this requires making unpopular.
Decisions that we're trying to get ahead of the curve skated the puck.
And I having sat at that table for five and a half years I've never seen.
Any other tendencies that table.
Now whether we get that -- -- not time will tell but we're trying to stay ahead of the curve.
Let me ask you a question that I -- -- very frequently -- -- I don't know the answer to Europe for a better -- answer.
Whether or not looking at what has happened to all these bailouts of banks including some foreign banks by the way to get paid a 100% of their credit -- also -- bets.
Was the Fed ever designed.
To be the lender of last resort for institutions like AIG's financial services -- Goldman Sachs.
Well if you know they were under our purview when the crisis hit.
-- all central banks are designed to -- -- my career.
That's why you have central banks and that goes back the original Walter -- of treatment of the panic of 1825 of with the Bank of England.
And basically follow that rule book we just updated brought -- modern context.
And we addressed to all those issues during a -- The real issue here is expanding our balance sheet now what's known as quantitative easing now that rates have been cut to near zero.
The right behavior as a normal way to operate monetary policy as opposed to doing it during a crisis.
So we dealt with.
Took some extreme measures but all -- playing with -- -- within the playbook written for central bankers as a lender of last resort.
As to the large institution David I'm rather outspoken on this I do believe we still have a problem too big to fail.
One of our duties now is to implement the Dodd-Frank.
Regulations I think we are internally proceeding.
Very firmly on that front.
And that's a duty we have performed so it's not create additional uncertainty.
And my view is that we have to regulate better.
And make sure that all those institutions under our regulatory purview.
Are a fairly regulated better -- a way that doesn't disadvantage.
Community banks regional banks and others in favor of the largest institutions.
And make very clearly that if they screw up they will fail.
And unfortunate I don't think.
That message has been clearly transmitted yet but we are working on getting our response -- underdog frank.
In order as quickly as possible I think double.
Help -- -- further confidence.
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