Federal Reserve Chairman: Oops, My Bad!
“Ooops! My bad.” was essentially the reply by Federal Reserve Chairman Ben Bernanke when questioned about his remarks to a reporter which led to a major downturn on Wall Street. The Chair of the Federal Reserve could rightly be called the most powerful man in the world. While the President controls the military, it is the Federal Reserve which controls what the economy does. A little increase in interest rates and the economy slows down, a slight decrease and the economy builds up again. With the size of the US economy, any fluctuation in the US economy sends reverberations around the world. So the Chairman does have a lot of power. The office of the Chairman of the Federal Reserve has way too much power for someone to casually through out comments so indiscriminately.
So what did he say that was so bad? Some people just talk too much for their own good.
CNBC reported that day that Bernanke said investors had misinterpreted his recent congressional remarks as an indication the Fed was nearly done raising rates. Stocks — which had been up for most of the day — slumped.
How does someone misinterpret comments concerning raising interest rates, besides the fact that it was CNBC? It definitely raises “questions about his communication skills.”
In a related topic, Bernanke testified before Congress on the lack of financial awareness by the next generation. At issue as a Jump $tarts for Financial Smarts for Students survey which found only 52% of high schools even had a basic understanding of financial matters. Take for example, only “14% thought stocks were likely to have higher average return than savings bonds, savings accounts, and checking accounts,” when in fact stocks have always bested the other three.
The tests demonstrated a lack of understanding of many concepts adults take for granted. When asked what is the greatest cause of financial difficulty, where families can not pay their bills, many blamed bad luck instead of buying too much on credit. And many thought people could live fairly well off of social security.
Now that is scary. I hope these kids learn the lessons of finances before life gives them a rude awakening.
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