Sunday, December 5, 2010
Bernanke on 60 Minutes
You can see Bernanke's 60 Minutes interview here. Not much new here, but one thing of note. Bernanke says that the fear of inflation from QE2 is "overstated." Further, he says that the notion that QE2 involves printing more money is "a myth." What the Fed is really up to, according to him, is "lowering interest rates by buying Treasury securities." Maybe these comments were lifted out of context, but of course this is not correct. If we take "printing money" to be the issue of outside money, then that is exactly what the Fed has to do to purchase Treasury securities, as we all know. Bernanke could have explained some of the subtleties of what potentially happens to the increased stock of reserves that the Fed exchanges for long-maturity Treasuries, but that's certainly not what came across in the interview.