Federal Reserve Board Chairman Ben Bernanke discussed the Federal Reserve's recently announced asset purchase program, central bank independence, unemployment, and other topics during a December 5 appearance on the CBS news program 60 Minutes.
In November, the Fed launched a plan to buy $600 billion in Treasury securities, a move that has sparked some criticism. Bernanke said critics have focused on the risk that this action will cause inflation but have ignored the risks of inaction by the Fed—notably, that the economic recovery could falter. In addition, Bernanke stressed that the asset purchase program does not amount to "printing money."
"The amount of currency in circulation is not changing," Bernanke told the interviewer, Scott Pelley. "The money supply is not changing in any significant way. What we're [the Federal Reserve] doing is lowering interest rates by buying Treasury securities. And by lowering interest rates we hope to stimulate the economy to grow faster. So the trick is to find the appropriate moment to begin to unwind this policy, and that's what we're going to do."
Pelley also sought Bernanke's views on congressional proposals that would likely curtail the Fed's political independence. According to Bernanke, "The central bank needs to be able to make policy without short-term political concerns, in order to do what's best for the economy. We do all of our analysis—we do all of our policy decisions—based on what we think the economy needs, not based on when the election is or what political conditions are."
The asset purchase program was one such policy decision. According to Bernanke, it is aimed in part at lowering unemployment, which Bernanke said is stubbornly high. At the current pace of job growth, he said, the nation might not reach "more normal levels" of 5 percent to 6 percent unemployment for four to five years.
