Bernanke defends Fed’s bond purchase in light of unemployment rates
Federal Reserve chairman Ben Bernanke supported the Fed's purchase of $600 billion in bonds Friday, saying the move was meant to boost economic recovery and lower unemployment rates.
In a speech to a European Central Bank conference in Frankfurt, Bernanke pointed out that the global economy depends on the U.S. for financial recovery.
"On its current economic trajectory the United States runs the risk of seeing millions of workers unemployed or underemployed for years. As a society, we should find that outcome unacceptable," said Bernanke.
Reserve officials were confident they made the right choice, citing a high unemployment rate of 10 percent and a relatively low inflation of 1 percent. Bernanke said the Fed's research found that the purchase could create between 700,000 and 1 million jobs over the next two years, according to the Wall Street Journal.
The central bank's debt-buying scheme came under some criticism from those worried about how it would affect the economy. U.S. Republicans expressed concern over inflation. Some foreign exchange dealers objected, saying that the purchase would weaken the dollar against foreign currencies and suggested that the move was made intentionally to "spur exports and the economy," reports the Journal.
Brazilian finance minister Guido Mantega has previously warned of ineffectiveness and potential conflict and said that "throwing money out of a helicopter doesn't do any good," according to the New York Times.
Meanwhile, others expressed support for the decision. Economist Anil Kashyap told the Times that "it’s already well understood that things could have gotten much worse in 2008 if the Fed hadn't gone to the mat, and I think Ben will be viewed as a hero."