WASHINGTON (MNI) – The following is the text of the transcript
of an interview between Federal Reserve Chairman Ben Bernanke and ABC
News which is scheduled to air on ABC at 6:30 p.m ET March 27:
DIANE SAWYER: So you’ve been teaching the class. Just curious
what– what’s– is there a question that made you stop and think the
most as you’re teaching?
CHAIRMAN BERNANKE: Well– you know, I’m talk– I’m tackling– a big
topic which is the role of the Fed in the financial crisis. And it was a
good opportunity just to think through the– what happened in the last
few years. And the theme of the lectures is that, you know, you can make
sense of it all if you look to history. I– I was a student of the Great
Depression as an academic and I think some of the lessons– the mistakes
that were made– during the Great Depression are very helpful in
thinking about our response to the– the recent crisis. And I think we
avoided some of the most important mistakes.
DIANE SAWYER: And what’s the biggest less– difference in the
lesson we have to learn from this recession and the Depression?
CHAIRMAN BERNANKE: Well, the Federal Reserve and other policymakers
made, I think, two principle mistakes in the ’30s which led to such– a
disastrous and deep– depression across the world. And the first was–
monetary policy. The Fed did not ease monetary policy sufficiently. We
had a deflation in the United States, prices were dropping at about 10%
a year which is very unhealthy for an economy. And secondly the Fed
didn’t do enough to stop the financial system from– from crashing. We
had almost 10,000 banks fail in the United States in the 1930s. So I
think those were the two big mistakes.
DIANE SAWYER: And as– Americans what’s the lesson we should take
away from this recession?
CHAIRMAN BERNANKE: Well– again from the perspective of policy what
we needed– what the Fed needed to do– was to use monetary policy
constructively to help the economy recover and to do what was necessary
to keep the– financial system stable and keep it from falling apart–
which we did. And– I think we averted what would have been the– really
terrible outcomes– like those of the 1930s. Now, for Americans– I
think we need to take a look at our economy and think about the role of
the financial system– when it’s gonna generate growth for our economy
going– forward. And a lot of– questions have risen lately about–
education, skills and do we have the skills that will both create– a
more balanced income distribution to help people across the range of–
of– occupations and– and areas to– to– earn better livings and also
to compete internationally. So I think those are some of the areas that
we’ll be having to look at as a country going forward.
DIANE SAWYER: Turning to the economy today, what is the word you
would give American viewers, Americans out in the country about the
economy now? Are we in a recovery? Is it sustainable? How strong is this
recovery?
CHAIRMAN BERNANKE: Well, we are in a recovery. The economy’s been
growing– for almost three years. And we’ve had some good news lately.
We’ve– seen the unemployment rate come down. We’ve seen more jobs be
created. And– consumer and household– and business sentiment have all
improved, so that’s all positive, but–
DIANE SAWYER: Strong?
CHAIRMAN BERNANKE: –we do have a long way to go. I– I would say
that we– you know, it’s– it’s far too early to declare victory. We
have– still 8.3% unemployment, that’s– that’s too high. We’ve got a
lot of people been un– out of work for more than six months.
DIANE SAWYER: The president said that the economy is strong and
that it is– the recovery is speeding up. Do you agree?
CHAIRMAN BERNANKE: Well, the recent news has been good. But I think
we need to be cautious and make sure this is sustainable. And– we
haven’t quite yet got to the point where we can be completely confident
that we’re on a track to full recovery.
DIANE SAWYER: You once used the phrase green shoots. Are they now
what, stalks? Are they–
CHAIRMAN BERNANKE: Well, the–
DIANE SAWYER: –viable trees?
CHAIRMAN BERNANKE: I– I think they’re still shoots. We’re seeing
some– again some good– good indicators. It’s great to see some jobs
being created. It’s great to see unemployment come down the way it has
recently. And there are a lot of other indicators in the labor market
which are positive. But– again we’re still millions of jobs below where
we were before the– recession.
DIANE SAWYER: You worried that people are getting too optimistic?
CHAIRMAN BERNANKE: Well, optimism’s a good thing. It– makes people
go out and– you know, start businesses and spend and do whatever is
necessary to get the economy going. But I think as policymakers we need
to be– cautious and– and not– not change policy too quickly.
DIANE SAWYER: You must know that some people have written you’re
Eeyore (UNINTEL) and that it’s time to be a modified Tigger.
CHAIRMAN BERNANKE: Well– you know, it’s– forecasting the economy
is very tough. And we were somewhat too optimistic– early in the
recovery. And we were disappointed by the pace of recovery. I think we
have to be realistic. I think we have to tell people what we see and we
have to set our policies in a way consistent with that. But– again I
don’t want to deny that there has been some good news.
DIANE SAWYER: If– can Americans exhale about the fear of another
rec– of another recession?
CHAIRMAN BERNANKE: Well, again it’s hard to make forecasts, but the
Fed has been predicting moderate growth– you know, for the last three
years and we’ve been– we’ve been right. There hasn’t been a double dip
or a second recession. Right now I think the odds of it are pretty low.
But– with forecasting you just never say never, you have to keep
vigilant.
DIANE SAWYER: You don’t want to use the word strong?
CHAIRMAN BERNANKE: Not yet. Again labor market’s better, but– real
growth, real economic growth– still kinda moderate. We’d like to see
stronger growth which will guarantee that we keep making progress in the
labor market.
DIANE SAWYER: A couple of things, you had a nice bounce in the
stock market yesterday based on your speech.
CHAIRMAN BERNANKE: Well, we don’t pay attention much to day-to-day
movements in the stock market.
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** MNI Washington Bureau (202) 371-2121 **
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