Bernanke Offers Wisdom But No Hint Of Fed Moves
Ben Bernanke gave the graduating class of Princeton University one of the more unusual speeches for a Federal Reserve chairman: He quoted everyone from Lily Tomlin to Forrest Gump and scarcely mentioned economics.
Bernanke’s words are normally scrutinized by global investors for hints about the Fed’s possible next move on interest rates. But in his remarks Sunday in Princeton he scarcely mentioned economics. Instead, he took a poke at his profession.
“Economics,” Bernanke told the graduates, “is a highly sophisticated field of thought that is superb at explaining to policymakers precisely why the choices they made in the past were wrong.
“About the future, not so much.”
Bernanke offered nothing that could be taken as a hint of when the Fed might begin to taper its $85 billion-a-month in bond purchases. Those purchases have been intended to keep loan costs at record lows to encourage borrowing and spending.
The stock and bond markets have been rattled by speculation that the Fed will start to scale back its bond purchases later this year. Once the Fed does so, interest rates would likely creep up.
In his speech, Bernanke had a little fun with the culture of Washington, where he has spent the past nearly 11 years. He is serving his eighth year as Fed chairman and is expected to leave when his second term ends in January and return to Princeton, where he spent 17 years as a professor.
“In regard to politics, I have always liked Lily Tomlin’s line, in paraphrase, ‘I try to be cynical, but I just can’t keep up,’” he said.
Bernanke said it’s his impression that most Washington politicians and policymakers try to do the right thing most of the time.
“Public service isn’t easy,” he said. “But in the end, if you are inclined in that direction, it is a worthy and challenging pursuit.”
The chairman delivered his remarks in a speech titled “The Ten Suggestions,” a play on the Ten Commandments. He urged the new graduates to be open to surprises that are sure to come their way, invoking the line from the movie “Forrest Gump” about “life and boxes of chocolates and not knowing what you are going to get.”
Bernanke kidded the graduates’ parents about the financial strains of children to Princeton. He said someone who had sent three children to the Ivy League school once told him that financially, it was like “buying a new Cadillac every year and then driving it off a cliff.”
Bernanke has not said whether he will step down from the Fed in January. But he might have sent a hint about his likely departure in one of his jests Sunday that suggested he has begun the process of returning to Princeton.
“I wrote recently to inquire about the status of my leave from the university,” Bernanke said. “The letter I got back began, ‘Regrettably, Princeton receives many more qualified applicants for faculty positions than we can accommodate.’ “
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