Bernanke: Job gains present economic 'puzzle'

[cthulu2016]

12. In fairness...

Fed chairs are in an unusual position because their public predictions are not suppossed to accurate, but rather as accurate as possible while roiling business confidence the least.

Rather than read the tea-leaves in public pronouncements it's best to look at actual policy.

Since Bernanke has announced that the Fed funds rate will remain zero into 2014 we know that he believes:

1) There will be no "morning in America" rebound. If there was, it would have been in 2010.

2) Krugman was right. When Krugman published his Japanese liquidity trap paper 10+ years ago then-professor Bernanke agreed with an taught ts conclusions. a) inflation is a necessary part of the solution. b) in a liquidity trap inflation can only develop when the central bank promises inflation... promises to not raise rates when inflation first starts to develop. The problem is that you can print as much money as you want and it won't do a thing as long as market actors believe that the central bank will raise rates if the economy picks up. Since the US Fed as a quasi-political position Bernake cannot announce an inflation target of 3.5% (which would surely encourage borrowing at current rates and decrease the expected value of hoarding money) so the Fed has done the next best thing by promising not rate hikes for a very long time. That at least offers investors a good gambling chance of inflation developing without the Fed acting to nip it in the bud (along with any recovery)