Ben Bernanke’s speech today in Minneapolis is extremely similar to some things he’s said previously, but this time around in addition to reiterating that “the Federal Reserve has a range of tools that could be used to provide additional monetary stimulus” he also concluded by saying that “the Federal Reserve will certainly do all that it can to help restore high rates of growth and employment in a context of price stability.”
Now of course in the part Bernanke hasn’t said things like “the Federal Reserve will refuse to help restore high rates of growth and employment” but there has been this weird gap that most people in the press aren’t noticing. Bernanke, unlike some commentators, has never said that the Fed is out of ammunition. He’s always maintained that they have additional tools, so the implication has always been that the tools aren’t being used because the Fed has believed the situation is okay. Now, though, he’s blocked out extra time at the September meeting to discuss those tools with his colleagues and he’s saying that the Federal Reserve will do all that it can. And it can do a lot! It’s time to learn from Switzerland and get moving.