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Bernanke makes strong defense of Fed rate policies

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Chairman Ben Bernanke offered a sharp defense Monday of the Federal Reserve's bold policies to stimulate the weak economy, while cautioning Congress to respect its private discussions.

The Fed needs to drive down borrowing rates because the economy isn't growing fast enough to reduce high unemployment, Bernanke said in a speech to the Economic Club of Indiana. The unemployment rate is 8.1 percent. (See below for video highlights of Bernanke's speech.)



Low rates could help lower the federal budget deficit by reducing the government's borrowing costs and generating more tax revenue through stronger growth, Bernanke said.

Bernanke also cautioned Congress against changing the law so it could review the Fed's interest-rate policy discussions. Such a step would improperly inject political pressure into those talks and make Fed policymakers less likely to act, Bernanke warns.

The speech comes just weeks after the Fed voted at its Sept. 12-13 meeting to purchase $40 billion a month in mortgage-backed securities to push mortgage rates lower and help boost the housing market. The Fed left the program open ended, saying only that it would keep buying the bonds until the job market showed substantial improvement.

The Fed also said at the September meeting it plans to keep its benchmark short-term interest rate near zero through at least mid-2015, six months longer than its previous target date of late 2014.

The Fed's action was approved on an 11-1 vote.

The U.S. economy is struggling more than three years after the Great Recession ended. High unemployment and weak pay growth has made consumers more cautious about spending, which has hurt manufacturing and slowed broader growth.

The Fed is hoping to make home buying more attractive to help the broader economy. When home prices rise, people typically feel wealthier and spend more. Consumer spending drives nearly 70 percent of economic activity.



The Economic Club scheduled Bernanke for the speech about six months ago.

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  1. In reality, Lilly is maintaining profit by cutting costs such as Indiana/US citizen IT workers by a significant amount with their Tata Indian consulting connection, increasing Indian H1B's at Lillys Indiana locations significantly and offshoring to India high paying Indiana jobs to cut costs and increase profit at the expense of U.S. workers.

  2. I think perhaps there is legal precedence here in that the laws were intended for family farms, not pig processing plants on a huge scale. There has to be a way to squash this judges judgment and overrule her dumb judgement. Perhaps she should be required to live in one of those neighbors houses for a month next to the farm to see how she likes it. She is there to protect the people, not the corporations.

  3. http://www.omafra.gov.on.ca/english/engineer/facts/03-111.htm Corporate farms are not farms, they are indeed factories on a huge scale. The amount of waste and unhealthy smells are environmentally unsafe. If they want to do this, they should be forced to buy a boundary around their farm at a premium price to the homeowners and landowners that have to eat, sleep, and live in a cesspool of pig smells. Imagine living in a house that smells like a restroom all the time. Does the state really believe they should take the side of these corporate farms and not protect Indiana citizens. Perhaps justifiable they should force all the management of the farms to live on the farm itself and not live probably far away from there. Would be interesting to investigate the housing locations of those working at and managing the corporate farms.

  4. downtown in the same area as O'malia's. 350 E New York. Not sure that another one could survive. I agree a Target is needed d'town. Downtown Philly even had a 3 story Kmart for its downtown residents.

  5. Indy-area residents... most of you have no idea how AMAZING Aurelio's is. South of Chicago was a cool pizza place... but it pales in comparison to the heavenly thin crust Aurelio's pizza. Their deep dish is pretty good too. My waistline is expanding just thinking about this!

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