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This was added on 4/27/11

I watched Fed Chairman Bernanke's press conference today - and my comments on it are below, noting that I am doing it from memory, he was speaking too quickly for me to take notes. 

He did not really say anything that a close long-time Fed watcher would not know already. 

He actually did not answer many questions - he gave answers that did not address the specific issues that people were bringing up, but that have been pat, standard answers from the Fed in recent times.  I don't know if that was intentional or whether he simply could not get out of the habit of thinking in terms of those answers (i suspect the latter is the case). 

By not actually answering, with his answers, the hard questions that several reporters asked about the serious issues that are going on these days, he managed to avoid saying many things that would have made the current situation a lot more clear, a lot more stark, in terms of what it is actually like.  So I am not entirely sure he did not actually mean to approach it that way (in the context of being responsible for enforcing a law against recessions, which he explicitly brought up again during his prepared remarks and, also, made a reference to his recent "Humphrey-Hawkins testimony" during the question-and-answer session afterward). 

He did say that the Fed has to consider both sides of its dual mandate from Congress - full employment at low inflation.  He said that means that if intermediate-term inflation takes off, the Fed will have to act - but at the same time, must take employment considerations into account as best it can.  I think that means the Fed is getting closer and closer to the point where it will be between a rock and a hard spot, unable to fulfill both sides of its mandate at the same time (not that I think Bernanke is aware of this).  I have been predicting for a long time that the Fed would eventually reach that point in one way or another (noting that the Fed is required to maintain low inflation, so it has to react to even a commodity price inflation, never mind a hyperinflation). 

He said the rise in fuel prices was not at all helpful - and that the Fed is already adjusting its projections accordingly. 

But he also talked in terms of the schmaltzy language that I have seen in written Fed statements lately - that he expects the inflationary pressures to ease because he does not expect prices to go up much MORE.  I submit that the American people won't be satisfied until gas prices come way back down

He did say that he expects gas prices to stabilize or come back down (and therefore help the American people) - I don't think they will come back down until the economy starts faltering (i.e., demand is forced back down). 

He said that he is, in fact, aware of books that point out financial history that suggest that this downturn would be very difficult to get out of - but that his attitude is that people in the times of the previous crises did not try hard enough to get back out of the situation, and that is what he is trying to do.  This is typical Keynesian talk - and this website addresses that directly. 

He did say that the combination of a housing crisis, a banking crisis (there is still a credit crunch), and now also a gas price crisis is a particularly difficult combination to overcome, but that he still thinks that America has what it had before, and therefore what it takes to become great again, and that is why he is trying so hard.  I say the combination of difficulties he talked about is lethal - and this website explains why. 

He said that there will be no QE3, at least for the time being, because of the uptick in inflation due to rising gas prices.  He specifically stated that the trade-offs are becoming less favorable in terms of the risk factors, so he wants to hold off.  (What he is really saying is that he is being boxed in more and more, ending up more and more between a rock and a hard spot - but he would never say that in public.) 

He said - and emphasized again - that America's fiscal crisis is very real and must be resolved or the country is going to be in very deep trouble down the road.  This website talks about why that crisis will not go away. 

He talked about that the recovery is much slower than he would like - but he will continue to try to get it going faster and that he thinks it will speed up - and that unemployment is still much higher than he would like it to be and that (as he has also noted before) he thinks it will remain elevated for quite some time, but come down more. 

He alse reiterated that we are not even close to making up for the more than eight million jobs that were lost during the downturn.  So far, fewer than two million jobs have been added during the recovery. 

He noted that he is encouraged by the increase in jobs in the past few months, finally up to a couple of hundred thousand jobs added a month.  What he did not say is that most of those jobs are in small- and medium-sized businesses in the service sector - in other words, they are low-wage jobs that will not help the recovery much. 

And there is a report just out today that many large corporations are hiring mainly temporary workers (i.e., no permanent contract) - no surprise to me given what is going on in the economy, but those temp jobs do not help the economy much because the workers have to be careful about their spending. 

So the employment picture is not nearly as rosy as Bernanke was making it out to be today - and I think the fact that it is not so rosy is going to come back to bite the economy big-time pretty soon. 

I watched a webcast of the press conference, after which commentary was provided by others - and it seems they did not notice most, if not even all, of what I mentioned above, they were all gaga about what they heard, said Bernanke pushed all the right buttons and said all the right things, and the Wall Street traders must have agreed, the traders bid the stock market up all the way past Dow 12,700 afterward (before the market came back down a little to close just below 12,700).