The Mexican debt crisis, Latin American debt crisis, the crises of the 1990s, the Wall Street stock market crash, and other events should have reminded us, and did remind us, that financial instability remains a concern, remains a problem.
— Ben Bernanke
Preventing liquidation of an unbalanced market will leave you in tears.
The one thing people don't appreciate, I think, is that central banking is not a new development. It's been around for a very long time.
Economic science concerns itself primarily with theoretical and empirical generalizations about the behavior of individuals, institutions, markets, and national economies. Most academic research falls in this category.
In the typical economic recovery, a resurgent housing sector helps fuel reemployment and rising incomes.
Smart financial planning - such as budgeting, saving for emergencies, and preparing for retirement - can help households enjoy better lives while weathering financial shocks. Financial education can play a key role in getting to these outcomes.
No economy can succeed without a high-quality workforce, particularly in an age of globalization and technical change.
For practitioners of community development, as in any field, joining a network of like-minded professionals is important for building skills and becoming aware of opportunities and resources.
Small businesses have played an important role in fueling past economic recoveries.
Only a strong economy can create higher asset values and sustainably good returns for savers.
Stronger regulation and supervision aimed at problems with underwriting practices and lenders' risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates.
Home purchases that are very highly leveraged or unaffordable subject the borrower and lender to a great deal of risk. Moreover, even in a strong economy, unforeseen life events and risks in local real estate markets make highly leveraged borrowers vulnerable.
The children of the unemployed achieve less in school and appear to have reduced long-term earnings prospects.
Long-term unemployment is particularly costly to those directly affected, of course. But in addition, because of its negative effects on workers' skills and attachment to the labor force, long-term unemployment may ultimately reduce the productive capacity of our economy.
To be sure, the provision of liquidity alone can by no means solve the problems of credit risk and credit losses; but it can reduce liquidity premiums, help restore the confidence of investors, and thus promote stability.
Deflation is defined as a general decline in prices, with emphasis on the word 'general.'
Rents should begin to decelerate as the demand for owner-occupied housing stabilizes and the supply of rental units increases.
Different countries have different kinds of financial structures.
In a mature economy like India's, which is becoming modern and a financially-oriented economy, an independent central bank, responsible central bank, is really central to success.
Economic management involves the operation of economic frameworks in real time - for example, in the private sector, the management of complex financial institutions or, in the public sector, the day-to-day supervision of those institutions.
I am particularly pleased to see that the Bendheim Center for Finance is thriving.
When the economic well-being of their nation demanded a strong and creative response, my colleagues at the Federal Reserve... mustered the moral courage to do what was necessary.
Consumers going through foreclosure typically will see their credit scores drop, raising longer-term questions about their ability to rebound financially and perhaps pursue a more sustainable home purchase at some later point.
Building a rainy-day fund during good times may not be politically popular, but it can pay off during the bad times.
The movement toward a holistic approach to community development has been long in the making, but the housing crisis has motivated further progress.
The Fed's policy choices can always be debated, but the quality and commitment of the Federal Reserve as a public institution is second to none, and I am proud to lead it.
Many savers are also homeowners; indeed, a family's home may be its most important financial asset. Many savers are working, or would like to be.
Certainly, 9 percent unemployment and very slow growth is not a good situation.
High levels of homeownership have been shown to foster greater involvement in school and civic organizations, higher graduation rates, and greater neighborhood stability.
Because a person has to be either working or looking for work to be counted as part of the labor force, an increase in the number of people too discouraged to continue their search for work would reduce the unemployment rate, all else being equal - but not for a positive reason.
The role of liquidity in systemic events provides yet another reason why, in the future, a more system wide or macroprudential approach to regulation is needed.
The failure of Lehman Brothers demonstrated that liquidity provision by the Federal Reserve would not be sufficient to stop the crisis; substantial fiscal resources were necessary.
Since World War II, inflation - the apparently inexorable rise in the prices of goods and services - has been the bane of central bankers.
Growth in U.S. real imports slowed to about 3 percent in 2006, in part reflecting a drop in real terms in imports of crude oil and petroleum products.
Uncertainty is seen to retard investment independently of considerations of risk or expected return.
To achieve a more balanced international system over time, countries with excessive and unsustainable trade surpluses will need to allow their exchange rates to better reflect market fundamentals.
Economic engineering is about the design and analysis of frameworks for achieving specific economic objectives.
Many foreclosed homes are neglected or abandoned, as legal proceedings or other factors delay their resale. Deteriorating or vacant properties can, in turn, directly affect the quality of life in a neighborhood, for example, by leading to increases in vandalism or crime.
Monetary policy is a blunt tool which certainly affects the distribution of income and wealth, although whether the net effect is to increase or reduce inequality is not clear.
The decline in home equity makes it more difficult for struggling homeowners to refinance and reduces the financial incentive of stressed borrowers to remain in their homes.
Neighborhoods and communities are complex organisms that will be resilient only if they are healthy along a number of interrelated dimensions, much as a human body cannot be healthy without adequate air, water, rest, and food.
Community development has a long history of innovation and learning from experience.
The Federal Reserve Act requires the Federal Reserve to report annually on its operations and to publish its balance sheet weekly.
When historical relationships are taken into account, it is difficult to ascribe the house price bubble either to monetary policy or to the broader macroeconomic environment.
Now that I'm a civilian again, I can once more comment on economic and financial issues without my words being put under the microscope by Fed watchers.
For many of us, owning a home signaled a passage into adulthood that coincided with the start of a career and family.
In any given month, a large number of workers are being hired or are leaving their current jobs, illustrating the dynamism of the U.S. labor market.
Among other objectives, liquidity guidelines must take into account the risks that inadequate liquidity planning by major financial firms pose for the broader financial system, and they must ensure that these firms do not become excessively reliant on liquidity support from the central bank.
Sector-specific price declines, uncomfortable as they may be for producers in that sector, are generally not a problem for the economy as a whole and do not constitute deflation.
To be sure, faster growth in nominal labor compensation does not necessarily portend higher inflation.
