be cut off. i think it's also a challenge to our overall macroeconomy. beyond that, i take senators like mcconnell at their word that they are going to raise the debt limit and we are not going to see another round of rings winship but if you went down to the wire on the debt limit and if you went down the wire on the debt limit that would be a major threat to the economy. there is no reason that should happen and i'm confident congress will not want to put our economy through that. beyond that, i don't want to talk about and forecast the future of interest rates but if you step back and look at the fundamentals of the housing market i think there is still a lot of room for growth. we are building 900,000 houses a year. we add about 1 million households a year, existing

household also depreciates of the steady state of the housing production to 1.6 million homes in here. how we will get from 900,000 to 1.6 million in the next year, think we will over the next year but if you look at the fundamentals of the housing market in the demography that ultimately drives the plus the fact that housing is relatively affordable if you look at the affordability indexes and take into account housing -- i think that's an area where there's a lot of potential and upside still. [inaudible] >> the translation is interest rates affect the economy but if you look more fundamentally at the driver, the ways in which it matters you seethe business investment is relatively slow over the past year. that is the things that hasn't

been as good in the economy but the cost of capital overall is relatively cheap or were businesses and stock valuation is high and profitability as a share of the economy is high. i think a lot of the fundamental determinants of business investment are strong and affordability and below the steady state value so a lot of fundamental determinants of housing are still strong. i think we have an ability as an economy to grow robustly. >> i want to draw on the minimum wage a little bit. you know, as people here pointed out your confidence in unemployment notwithstanding there's a lot of discussion of whether cost george -- jobs a lot and an emotional. how do you see that happening given the climate in watching 10 before 2014 and a second

question, wasn't going to assess but your response to the that gentleman kind of forces me to. i wonder whether you think you would be a good person to be involved in monetary policy? >> so, on your first question and you asked a political question but let me drill down a tiny bit more into that to try to understand the effect of minimum wage on unemployment. it's always hard in economics to do cause and effect because a lot of different things are happening at the same time. ideally what you would like is a randomized experiment. if you can't find one title at the closest thing. alan krueger and david card years ago published the american economic review and found the closest thing to the random experiment which is new jersey raised its minimum wage. they let the counties on both sides of the border and looked at fast food restaurants and noted the fact that job growth is the same on both sides of the border.

that was a great study. the problem with that study was it was a few counties in two states at one point in time. since then i think it was about two years ago a paper that use basically the same methodology was published in a review of economic statistics but rather than looking at just one pair it looked at over 1000 pairs of different states and counties where one neighbor raised its minimum wage and one didn't and that's what happened with unemployment. so they looked at over 1000 on average the employment difference between a place that raised its minimum wage in the place that didn't was zero. it's that type of quasi-random experiment that is as close as we get to real science and empirical economics that is the type of data we looked at in assessing the employment impact of the minimum wage. that plus these meta-studies

where you look at 64 different different studies and you find the bulk of them and found a fat that was near zero. in terms of the politics, i have a little bit less expertise in that area but i have noticed that it tends to be a popular issue with the public and tends to be a popular issue with independents and it tends to be something that you have seen political figures say it will happen over their dead body in the year 1995 and 1996 the person is still alive and it didn't pass. but you know congress is different now so i can say what it ought to be from the economic evidence from what people have done in the past. in terms of you know i think stanley fisher is an outstanding economist and an outstanding policymaker and knows an awful lot about how the world works. i think he would be good at a large number of jobs that he

could possibly do. >> i wanted to follow up on the question and i know it's still being implemented and as you said these things are unknowable in advance but i wonder how you were a assessing the success of the white house and aligning incentives for banks and whether the white house would take up financial regulation in the next three years again for any reason? >> this is still a large task of implementing dodd-frank. we have put a lot of the most important pieces in effect in the volcker rule is the most recent of the pieces. one way to measure the success is you have seen the rating agencies talk about or downgrade some of the largest financial institutions and not downgrade them because they think they are risky or unsafe but because they don't think that they are going to be bailed out by the taxpayers if they run into trouble. that was the central feature of dodd-frank and i think that is being increasingly understood by markets and increasingly

understood by the people who assess this that there are going to be any more taxpayer-funded bailouts. part of that is about reducing the chances that you are in that situation again with things like volcker rule and preventing that from happening but also making sure if you are in that situation no rule is going to be perfect to prevent every problem from happening. and if you're in that situation that you have resolution mechanisms that we didn't have in our -- at our disposal to resolve those taxpayers put in a lot of money at risk for tarp. it was all prepaid. we made a profit on that investment which is a testament to the economic management we saw from the fed and from the treasury and from president obama. but you can't count on that happening every time in the future and that is why in terms

of going forward as i said there's a lot of implementation. >> i think -- was still a big mistake. so what's the best economic policy to address greenhouse emissions and will regulating power plants be done in our economy? >> so the best thing we currently have at our disposal is the regulatory authority and environmental protection agency has over both sources and existing sources of rain house gases under the clean air act and that is something the president has instructed them to do and they are working on it. if you step back, that is an area where you can do quite a lot administratively. there was whacks them -- waxman-markey in 2000 which a

president supported him because it was legislative they didn't just rely on existing authorities. it was an even more comprehensive approach to dealing with climate and affected every source of emissions done in a comprehensive and flexible way. i think something like that is even closer to the ideal but i think there's a huge amount we can to administratively. in this area, a lot of what you are doing in climate is going with a grain of the economy. you are seeing especially with the decline in price we have seen for natural gas, the increase that we have seen in renewables, a a lot of what the epa is doing is going with a grain of that helping accelerate the transformation that is already underway in american energy and you know certainly as an economist would i do is look at the cost-benefit. this is an area where it is very

easy to design policies for the benefits that massively outweigh the costs. >> the keystone pipeline decision a long time coming. i know there's an environmental impact. do you look at the economic impact in following up on his question various red -- do you look at the economic impact? >> i will answer that question from myself recently which is i haven't been personally involved in looking at the economic impact of that because it is something that the state department is focused on and the state department -- the president is very much looking at the impact on climate. in terms of jobs insofar as i have read anything about it my understanding is the impact on jobs in the long run is pretty small. i can't remember, it's a couple thousand or something like that and so either way the argument

this is a huge help to the economy or huge damage to the economy if you don't do it, if you did this to the full accounting of costs and benefits and impact that would have and that part of the debate is overstated. as i said it's something the state department is doing. [inaudible] >> i have noticed that it looks like that sometimes. >> i was surprised and a lot of people were with what paul ryan said last week that you can't get nothing for raising the debt limit which is what you get is protecting the full faith and credit of the united states and you get the avoidance of a world financial crisis. that is something. is the administration prepared to bargain on this issue or just to stonewall at? >> we are not prepared to bargain the full faith and credit of the united states.

we said there should be a bargain over the sequestered and that was exact to the model. we dealt with is a question that forced us as a country to do medium and long-term deficit reduction. there are a lot of things that could force a discussion about our fiscal future but going into default this and one of them. the last few times we did this, we did it without negotiating with the ransom and hostagetaking and there's no reason we can't follow the same model we all it in 2013 and for frankly most of the 100 years. >> we voted on it several times. >> give and long-term unemployment insurance why wasn't included in the debate? >> the president wanted it there. senator murray wanted it there. leader pelosi wanted it there and you know there was absolute refusal from the other side.

president bush. the president absolutely pushed. there's something really really important in this agreement and we are not going to blow something up that is an important step forward for our economy and our certainty for investments and all the things we need to invest in. when there will be other opportunities to get insurance but would love to have seen it there. the most important thing is that i get done so right now senator jack reid has legislation and the president strongly supports to actually get it done in the senate is going to have it both on that. we have had 12 votes. the unemployment insurance has passed 12 times since extended benefits started in june 2008. in june 2008, the unemployment rate was 5.6%. the average number of weeks of unemployment was 17 weeks. now the unemployment rate is 7% and the average weeks is 36

weeks. president bush did extended employment insurance in 2008 surely there's more reason for us to be doing it today. the drumbeat in the pressure is just going to grow on the nation. >> my formulation looks like this. republicans believe economic growth is sufficient. if the economy is growing people can solve their own problems and the democrats believe it's necessary but not sufficient. we still need a safe he met. is there any kind of safety net that the white house can pursue on its own unemployment compensation requires congress. health care is a safety net program but will require congress. what can the white house do on the safetynet? >> i think you put that quite well which is growth is absolutely necessary but as we have seen is not sufficient and we need to make sure that growth is shared and the growth is stronger when it is shared. i think far and away the best

instruments we have for that our legislative and require legislation. we are trying to to do a weekend and i will give you an example of long-term unemployment working on what we can do with skills connecting businesses and community colleges and workers to improve skills. we are looking at a range of other actions that would affect wages and inequality. but the biggest dials are still legislative. >> does the administration have any kind of backup plan? this may be beyond your purview. if not i get enough young healthy people sign up for the affordable care at, what's going to happen? i mean, i teach a university course and the students are all saying what is this year about a penalty and why am i going to have to pay this? i said well it will be in april 2015. they say april 2015? that is never. they aren't worried about paying a penalty. what are you going to do if they

don't sign them up? the numbers don't look that good or young healthy people. >> we actually don't have a great demographic right now but what we do have is there was a big increase in enrollment in november relative to october and we have seen increasing demand in december although we don't have the final numbers and we don't have the demographic right down. we are obviously making if not a planned beet -- b a plan a to do the most aggressive enrollment effort you can with young people in using social media. you see the insurance companies doing paid advertising. it's in the insurance companies interest to sign these people up to the part of what you did in the affordable care act was we created a private system but then we tried to create the right incentives for those private at yours. rather than keeping those people away they have the incentive to bring people in those customers up so i think we are doing everything we can but unleashing the private sector and the large

amounts they will spend on advertising might even more important. >> that you have no particular backup plan? >> there's a plan a which is to enroll as many young and healthy people as we possibly can. >> okay, well let's hope we see the >> on the next washington journal, oklahoma senator tom coburn talks about federal spending. then looking at tax reform in light of congress passing the federal budget agreement. the partnership of public service on a recent survey about federal employees and how they view their jobs in the workplace. "washington journal" is live at 7:00 a.m. eastern on c-span.

this was a deliberate move by the federal government to end the controversy. perspectiveys the of the government. to was the one who stood out say hello to the crowd. she was responsible. that was the idea. she should have been protected. there was no protection. they said there would be any lead force of policemen who would accompany her to the political rally -- into the political rally. we saw videos, pictures, we talk to witnesses, we interview 250 people -- they saw no block formation, no elite force for

her protection. that was the duty of the government. >> former u.n. assistance munozary general heraldo on the former pakistani prime minister's assassination. evin. depth with mark live tv, weekends on c-span 2. we want to know what your favorite books were in 2013. to discussreaders the notable books published this year. go to book tv.org. enter the chat room. examines the council the mexican energy sector.

also from the atlantic council, senator john mccain speaks about political turmoil in the ukraine. live coverage at 11:30 a.m. eastern. the wilson center examines the u.s.-brazil relations in a discussion with a former ambassador to brazil. outgoing federal reserve chairman ben bernanke help us live news conference wednesday after the fed's open market committee meeting. he explained the decision to start trimming the economic stimulus program known as quantitative easing.

>> good afternoon. the committee decided, starting next month, to modestly reduce the pace at which it is increasing the balance sheet. the current near zero range for the federal funds range target likely will remain appropriate after the unemployment rate declines below 6.5% -- especially if projected inflation runs below the long- term goal. today's actions reflect the decision that the economy is making progress but that it has much farther to travel before conditions can be judged normal.

the economy has been expanding at a moderate pace. we expect that growth will pick up in coming quarters, helped by accommodative monetary policy and waning fiscal drag. recovery clearly is far from complete, with unemployment still elevated and with underemployment and long-term unemployment still major concerns. we have also seen ongoing declines in labor force participation. population, but also discouragement on the part of potential workers. inflation has been running below the objective of 2%. inflation below its objective could pose a risk to economic performance. this outlook is probably

consistent with individual economic projections submitted in conjunction with this meeting. as always, each participant's projections are conditional on their own view of appropriate monetary policy. increases inr gross domestic product of a central tendency of 2.2% to 2.3%. year -- with% next similar growth estimates for 2015 and 2016. the unemployment rate will continue to decline. the central tendency of projections as it falling to between 6.3% and 6.6% in the fourth quarter of 2014 and then to between 5.3% and 5.8% in 2016.

participants continue to see inflation running below projections for a time. tendency projections are rising to 1.4% to 1.6% next year. let me know return to our decision to reduce the pace of asset purchases. , we we began the program said that we would continue purchases until the outlook for the labor market had improved substantially in the context of price stability. we have seen a meaningful progress in the labor market. since we began the program, the economy has added about 2.9 million jobs and the unemployment rate has fallen by more than a percentage point. for comparison, when we started the program, we saw the unemployment rate remaining at around eight percent through

2014. nonfarm payrolls have been increasing at a pace of about 200,000 jobs per month. the unemployment rate has fallen i 6/10 of a percentage point since june. household spending is picking up. we expect economic growth to be strong enough to support further gains. the risks around the forecasts of growth in unemployment have become more nearly balanced rather than tilted at the inception of the program. we have been purchasing $85 billion per month, as you know. starting in january, we will be purchasing $75 billion of securities per month. it is important to note that even after this reduction, we

will still be expanding our holdings of long-term securities at a rapid pace. we will continue to roll over maturing treasury securities and intoest treasury payments agency mortgage-backed securities. sizable and still increasing holdings will continue to put downward pressure on long-term interest rates, support mortgage markets, and make financial conditions more accommodative. will help move inflation back toward the objective. and support the labor market. reflectsary reduction the belief that progress toward economic objectives will be sustained. if the incoming data broadly support the committee's outlook in inflation, we will reduce further measured steps at future meetings. of course, continued progress is by no means certain. consequently, future adjustments will be deliberate and dependent

on incoming information. asset purchases remain a useful tool that we are prepared to deploy as needed to meet our objectives. with unemployment still well , and withnormal rate inflation continuing to run below the long-term objective, highly accommodative monetary policy remains appropriate. formphasize the commitment as long as needed, forward guidance was also enhanced today. the committee has said that the low target range for the federal funds range would be appropriate at least as long as the unemployment rate remained above 6.5%. nolation is expected to be more than 0.5% above the long- term goal. we have emphasized that these

numbers are thresholds, not triggers. crossing a threshold would not lead automatically to an increase, but would indicate only that it was appropriate for the committee to consider whether the broader economic outlook justified such an increase. with many participants projecting that the 6.5% unemployment threshold will be reached by the end of 2014, the committee decided to provide additional information about after the threshold is crossed. ,ased on the current assessment which is informed by a range of the committee now anticipates it will likely be appropriate to maintain the current federal funds rate target well past the time that the unemployment rate declined to below 6.5%. especially if inflation continues to run below the goal. this expectation reflects our assessment based on a set of

indicators that there will still be a said stitch amount of slack in the labor market. imposestinuing slack heavy costs on the unemployed and underemployed and their families and reduces our nation's productive capacity, warranting our ongoing, highly accommodative policy. the prospects for inflation provide another reason to keep policy accommodative. the committee is determined to avoid inflation that is too low, as well as inflation that is too high. it anticipates keeping rates until rates moved back to their objective. tendenciese central projected the unemployment rate 17ompasses 6.5%, 15 out of

participants do not expect a rate increase. until 2016. participants, the projection is 75 basis points at the end of 2015 and 1.75% at the end in summary, a reflecting generally to the summary for the market, the committee decided today to modestly reduce the monthly pace at which it is adding to the longer-term securities on its balance sheet. if incoming information supports the committees expect tatian of further progress toward this objective, the committee is likely to reduce the pace of monthly purchases in further measured steps in future meetings. however, the process will be delivered and data dependent and asset purchases are not on a set course. the fomc provided additional guidance on short-term interest rates expecting to maintain the federal funds target range well

past the time the on employment rate falls below 6.5% especially if projected inflation continues to run below two percent. guidance and the increasing holdings of longer- term securities will ensure that monitoring policy remains highly accommodative, consistent with the pursuit of its mandated objectives of maximum employment and price stability. thank you and i will be glad to take your questions. today was the first reduction of asset purchases. you said future reductions will likely recur in measured steps. can you tell us anymore about the framework used to determine the size and timing of those reductions. expected to program to and by the middle of next year. is that a likely scenario? >> as i said, the steps that we

take will be data dependent. if we are making progress in terms of inflation and new job danes, i imagine we will continue to do a measured reduction at each meeting. that will take us too late in the year, not by the middle of the year. slows for some reason or we are disappointed in the outcomes, we could skip a meeting or two. if things really pick up, we could go a bit faster. similartation is for moderate steps going forward throughout most of 2014. >> thank you, when you say similar moderate steps going forward, is $10 billion and increment that people should anticipate?

is equal amounts of mortgage- backed securities and treasuries also what one should anticipate? when you say " well past the unemployment rate of 6.5%" why not pick them up -- when i pick a number? >> -- why not pick a number? >> on the issue of $10 billion, we said we would take further modest steps. that would be the general range. i want to emphasize that we are going to be data dependent. we could stop purchases if the economy disappoints and we could pick them up somewhat if the economy is stronger. treasuries,nbs vs we discussed that issue. i think the general sense of the committee is that equal reductions was the way to do this. it does not make a great deal of difference in the and how much we hold. that was going to be our strategy.

on the issue of another number, the unemployment rate -- let's talk first about the labor market conditions -- the unemployment rate is a good indicator of the labor market. it's probably the best single indicator we had. ve. were comfortable setting 6.5% unemployment rate at the point more we would look at a wrought set of later -- broad set of labor market indicators. precisely because we don't want to look just at the unemployment rate, once we get to 6.5, we want to look at hiring, quits, vacancies, participation, long- term unemployment ,etc, wages -- we could not put it in terms of another unemployment rate level specifically. i expect there will be some time past the 6.5% before all of the other variables we are looking at will line up in a way that will give us confidence that the

labor market is strong enough to withstand the beginning of increases in rates. the survey of economic projections which were distributed our individual assessments and not the collective committee view but it gives you some sense of current expectations about the length of time. the sep shows the 6.5% as expected by a large number of people to be reached at the end of next year. then the first rate increases according to thedots chart take place at the end of 2015. that is the order of magnitude people are expecting. i emphasize that it will depend on our being persuaded that across a broad range of indicators, the labor market is sufficiently strong and we could begin to withdraw accommodation. mr. chairman, the fed is

going through a transition next month. thatou talk about the role janet yellen played in formulating the policy that is being laid out today and what kind of consistency the public can expect as we go into her tenure am assuming she is confirmed emma with the program you are laying out today. will it carry on under her leadership? >> yes, it will. i have always consulted closely with janet well before she was named by the president. i consulted closely with her on these decisions as well. she fully supports what we did today. >> mr. chairman, your inflation forecasts never get back to two percent in the time horizon you have covered here after 2016. why should we believe the fed

has asymmetric inflation cycle and why should we believe you have an optimal control policy. that would imply inflation going a bit above targets. >> again, these are individual estimates. we do think that inflation will gradually move act to two percent and we allow for the possibility, as you know in our guidance, that it could go as high as 2.5%. even though inflation has been quite low in 2013, let me give you the case for why inflation might rise. first, there are special factors such as health care costs and some other things that have been unusually low and might be reversed. if you look at the fundamentals for inflation including inflation expectations whether measured by financial markets or surveys, if you look at growth which we now anticipate will pick up in the

u.s. and internationally, if you look at wages which have been growing at two percent and a little bit higher according to many indicators, all of these things suggest inflation will gradually pick up. emphasize in my opening remarks and is cleared our statement is that we take this very seriously. it's not easy -- inflation cannot be picked up and moved where you wanted. it requires some luck and some good policy. we are very committed to make sure inflation does not stay too are continuing to monitor that carefully and take whatever actions are necessary to achieve that. >>under optimal control, it woud take a while -- inflation can be quiteinertial and take some time to move and the responsiveness of inflation to increasing economic activity is quite low.

environment where we --e falling all prices falling oil prices and downward forces on inflation, it's difficult to get inflation to move quickly to target. we are, again, committed to doing what is necessary to get inflation back to target over the next couple of years. there has been a great deal of discussion in your profession about the potency of policy at the zero boundary. it's very striking that inflation has fallen while qe3 has been in place in the economy continues to under shoot the fmoc forecast. the simple question is -- are you giving up? reached the limit of your policy tools and is there nothing more you can do? the economy is still running way below the trendline that existed

before the financial crisis. >> everything depends on what benchmark you compare it to . i said last year that monetary policy was not a panacea. it could not solve all our problems. in particular, it cannot do anything about a slowing of potential growth which appears to have happened to some extent. it cannot do much or anything about fiscal policy which is working in the opposite direction. given those things, and think the outcomes we have had are perhaps not as bad as you might think. particular, as i've mentioned many times, the congressional budget office assessed the fiscal drag in 2013 as being 1.5 percentage points of growth. we look like we will get in the low 2 actual growth. the monetary policy appears to have succeeded in offsetting

some of that fiscal drag. we were not sure we can accomplish that. we are certainly not giving up. we intend to maintain a highly accommodative policy. nothing we did today was intended to reduce accommodation. we will still be buying assets at a high rate and increasing our balance sheet and holding onto those assets and our guidance today, we strengthened our guidance to make sure we keep the key rates low, well the unemployment rate of 6.5%. call -- was it a close call in the vote today given what you have said about the outlook and your forecast? was there a lot of debate on whether to start tapering now or wait longer and wait for more data? >> certainly, it was an important decision and we debated quite extensively.

asked did weid, we feel comfortable to say we had we set interia wasand that criterion the labor market. if you look at the cumulative improvement, or if you look at recent numbers on employment and unemployment and also in terms of growth, we are seeing encouraging numbers in terms of household spending numbers. fiscal drag was reduced. you will see we reject a small pickup into next year. there was a reasonable expectation first that the

recent gains in the labor market would continue we are just beginning this process now. it is true that while we have passed improvement on the labor market, there is a question about inflation which is a bit of a concern as we indicated in our statement..>> state, local, an andake that very seriously if inflation does not show signs of returning to target, we will take appropriate action. >> now that you have introduced

tapering into the system, if the economy were to stumble again in the future, would you recommend or have you discussed with your colleagues, increasing bond buying in the future and have you considered any alternative measures -- more direct measures into the economy -- if it stumbles again? >> will kind of stimulus to you mean? >> anything you would not buy back from the banks? >> in terms of the legal authorities that the federal reserve has, if we could ask for it. we are getting into a fanciful discussion. are assettools personages we are allowed -- asset purchases. we are not allowed to buy corporate or other things the way many central banks are. zero,nterest rates near

we can manage our forward guidance. i think that has been effective and we could probably do more with that but there are limits to that. beyond a certain point, markets may not accept -- may not view the long distance way ahead guidance as being credible. raten change the interest we pay on the reserves which is something we have talked about. theother kind of thing -- only other thing i can think of that amounts to a direct infusion into the economy is actions similar to the british funding for lending program. we could do something like that and we looked at that because we have a discount window to banks.

different from europe and the uk, here, our banks are flush with liquidity and plenty of cash on hand. they owe lots of reserves, of course and so our sense is that they would not have a take up on the program under the current conditions. we do not have the authority to lend directly to small businesses or other types of institutions. i don't think tight credit is the major problem. what we have is firms are either not looking for credit or it their balance sheets are not that they pass creditworthy screens at the bank. we have a range of things we can do but we are already being really aggressive, i think. under some circumstances, yes. >> [inaudible] i have a narrow question and

a broader question. did the changeover and they should play any role in the decision on tapering? preference to get it started before you left? teachers ofthink monetary policy will have to say about your eight years at the federal reserve? >> the answer to the first question is no. the answer to the second question is i will be interested to see. i hope i live long enough to read the textbooks. showed -- there have been two big changes, more than two but to that i would cite at the fed in the last few years. the result in many ways of the crisis and the first is that the federal reserve has rediscovered its roots in the sense that the fed was created to stabilize the financial system in times of panic. used tools and we

that were analogous in spirit to what the central banks have done for hundreds of years. we adapted it to a modern financial system. ,he other thing that was unique largely unique about this period, is that we were trying to help the economy recover from a deep recession at a time when interest rates were essentially zero in required us to use other methods, the most prominent one was forward guidance and asset purchases, neither of which is clearly, unless you put aside the depression were monetary policy was pretty --sive, this is the first one of the first examples of aggressive monetary policy taking place in a near zero interest rate environment. we are now seeing japan and the uk and other companies -- other

countries also taking similar approaches and i think that will be an issue that monetary historians will be interested in exploring as well as monetary theorists and imperial studies. -- and empty urkel studies. --empirical studies. >> with one hand, you are giving the economy one thing by telling us or signaling that you may keep interest rates lower for longer than we previously thought. with the other hand, you are taking something away by reducing the large-scale asset purchases. if you think that over all this is maintaining the level of monetary accommodation steady, is that a sign that the decision to reduce the asset purchases is really to lead less about an improved outlook for the economy and perhaps more about the concerned that the asset purchases are less effective or might be fueling

bubbles? asset heraid before, kisses are a supplementary tool. our main tool is interest rate policy. the reason that asset purchases are supplementary tools is it is much less familiar. we have less ability to calibrate how big the effects are. that as theue balance sheet of the federal reserve gets large, managing that allen's sheet, exiting from that balance sheet, becomes more difficult. there are concerns about effects on -- a fax on asset prices but that another thing that future monetary economist will want to look at carefully. was that in september of 2012, we had interest rates already low. they were expected to stay low for a good long time. the economy was faltering and we needed an additional boost. we brought in the asset purchase program again. objectivea specific

which is substantial improvement in the outlook for the labor market. our sense was that once that inter-mediate objective was obtained, as the economy had grown and was moving forward, at that point, we could begin to wind down the secondary, supplementary tool and achieve the same amount of accommodation using interest rates and forward guidance. that this isterate not intended to be a tightening. don't think there is in place and problem or anything like that. on the one hand, asset purchases are still going to continue and we will still build our balance sheet. the total amount of assets we acquire are certainly more than what was expected in september, 2012. we will have a very substantial balance sheet which we will continue to hold. now we have also clarified our guidance that we will be keeping rates low well past unemployment of 6.5%.

we are trying here to get a high level of accommodation. weis true that the purchases view as supplementary to the interest rate policy. but again, the action today is intended to keep the level of accommodation more or less the same overall and enough to push the economy forward. in an earlier response, you laid out the argument about why the committee did not lower the 6.5% unemployment threshold. is that conversation over? have you all put off the table changing the threshold? have there been further discussion on perhaps adding a lower bound to the inflation target? specifically, what tools or actions could the committee take if inflation continues to run below your

target or false further? -- or falls further. >> i would not expect any changes in the very near term. we want to see how much accommodation we have and whether it's sufficient and whether the economy continues to grow and inflation moves as we anticipate. there are things we can do. we can strengthen the guidance in various ways. while the view of the committee was that the best way forward today was in a more qualitative approach which incorporates elements both of the unemployment threshold and the furthern floor, strengthening would be possible. that is something that has not been ruled out. are still there to be used. we do have tools to manage a large balance sheet. we have made a lot of rugrats on

that. -- we have made a lot of progress on that. high accommodation at a slower pace and are interest rate policy, we do have other things we can do if we need to ramp up again. that being said, we are hopeful that the economy will continue to make progress and we will begin to see the whites of the eyes of the end of the recovery and the beginning of a nor that ofa more normal period economic growth. some members of your staff published a paper earlier this fall arguing that in times of high unemployment and when some of that unemployment is calcifying into disengagement, there's an argument for monetary policy to be more aggressive. yet you are now announcing that you will do less rather than more. the fed has done it twice before and has regretted the decision.

can you talk about why you are not erring on the side of doing more? >> again, we are not doing less. we will see how accommodation shakes out. while we are slowing asset purchases a bit, again, we expect total pounds she to be quite large and maintained at a large level for a long time. we expect to keep rates low for a very long time. we are providing a great deal of accommodation to the economy. i agree with your observation and the observation of the paper that you cited that there is a case for being particularly aggressive. i think we have been aggressive to try to keep the economy growing and we are seeing progress in the labor market. i would dispute the idea that we are not inviting a lot of accommodation to the economy. given the billions of

dollars that the fed has put into the economy over the years, do you see a leading reason why the economy has not created more jobs? been -- it's been about a little over four years now since the recovery began. it's been a slow recovery. there are a number of reasons for that. economistsething for and historians to grapple with but there is number of factors which have contributed to slower road. -- slower growth. it includes the observation that financial crises tend to disrupt the economy and affect innovation and new products and new firms. we had a big housing bust and so the construction sector has been quite depressed or a while. we have had continuing financial disturbances in europe and

elsewhere. tight, on thery whole except for 2009, very tight fiscal dollars a. people don't appreciate how tight fiscal policy has been. the lasttage in recession which was milder,.>> state, local, and federal governments had additional workers.from the trough of the recession. at the same point in this recovery, the change in state, local, and federal workers is minus 600,000. we have one million workers difference. the fiscal policy has been tight and contractionary. that being said, we have been disappointed in the face of growth and we do not fully why.rstand. some of it might be a slower pace of underlying potential.

participationhas been disappointing. it might have been there has been some bad luck. but compared to other advanced countries, europe and the u.k. and japan, the u.s. recovery has iten better than most. hasnot been good or satisfactory. we still have a labor market where it is not easy for people to find work. a lot of people cannot get the experience into the labor market. given all of the things that we have faced, it is perhaps in retrospect, somewhat tepid. >> thank you. you talked a bit about risk of policy.

congress is set to pass a budget deal. they have not done much to reduce the deficit. it looks like they're not going to do anything until after the next presidential election. did you talk a little bit about that?-- could you talk a little about that? are they pressing for a bigger deal and reducing the u.s. debt burden? thank you. >> i do not address specific fiscal action. i will say a couple of things. one is relative to where we were, it is nice that there has been a bipartisan feel and that it looks like in the past it passed in both houses of congress. it is directionally what i have recommended in testimony on the which is that it eases the fiscal restraints in the next couple of years where the economy needs help to finish the recovery.

in place of that, it achieves savings further out in the 10 year window. those things are positive things. of course, there is more work to be done. i have no doubt about that. it should be a better situation than what we had in september and october. i think it would be good for confidence and fiscal policy and congressional leaders to work together, even if the outcomes are small as this was. it is a good thing that they are working cooperatively and making some progress. >> chairman bernanke, as you look back on the regulatory reform over the last several years, the rules that have been

completed and will have yet to be finalized, what rules would you have liked to be seen as tougher? as someone that has been a steward of the financial crisis and the reform efforts, do feel that the safeguards are in place and that the system is safer? >> the system is certainly safer. one indication of that is amount of capital that large banks hold. for example, on the capital side, we have imposed requirements that are much tougher for the large banks. we have imposed -- there is the use of stress testing. we try to see whether banks have enough capital not only to deal with normal fluctuations, but to deal with this of your combination of a sharp downturn in the economy and with bad financial conditions.

that has been a very important test of both of banks to survive a bad situation and also their ability to measure their risk at which is something that was very efficient going into the crisis. beyond that, we're looking at a leverage ratio for it that we expect to complete fairly soon. there is a possibility of having debt required at the holding company to assist in a resolution we're looking at backstop firms that rely heavily on short term wholesale funding. there is a much stronger capital oriented drive at this point to strengthen our financial system. --at is when they mentioned. that's one dimension. there is liquidity and other aspects. it does not really up to me to

say whether these things are tougher not. there are observers who are writing and thinking about this. they will have their opinions. i guess what i would say about that is that we are not done. we still have some important rules to complete. as we get these will stun and implement them, i'm sure there will be a difference in the system. whether more needs to be done, i think that is a question. we will be working on this for some time. >> peter cook a bloomberg television. thank you for holding this news conference. i hope you will encourage your successors to hold more of them. one thing that will be happening next year according to fed chairman of that house a finance committee is a full review of the federal reserve. is that the structure of the fed and the mission of the fed and the mandate of the fed?

i want to know if you might be willing to impart some final words of wisdom as they consider twosible legislative changes. members of congress. what if anything are they due to the structure of the fed reserve that might help but policymakers in the future? do you think that is still? you think the dual mandate is merited? is there a decision with the benefit of hindsight that you would do differently? one change perhaps in the decision-making process that you think would have made a difference over the last eight years? >> on the centennial review, one of the things that i am proud of and have tried to accomplish over the last eight years is to increase the transparency of the fed and to increase the

accountability of the fed. you mentioned trips to capitol hill. i have testified many times, as have a number of colleagues. there is this notion that the fed is not audited or has had all kinds of secret books. as you know, we have complete openness to the general accountability office. we have and i.t. inspector general of our own. we have a private accounting firm that does all of the books and has tough standards. we publish regular reports and all of that. we are very open. we are by all means willing to work with congress to see if there's anything that they think might be done better or in a more effective way. we are open to doing that. i hope that those reviewing the central bank will of course

recognize that central banking is an old activity. the 17th century is when the swedish swiss bank and the bank of england began operation. we know a lot of central banking. there are a lot of experts on central banking and monetary -- policy. every major country has a central bank. we are not starting from scratch. there are a lot of people with expertise. we are bringing in serious people who understand these issues and can make good suggestions. there are a range of different mandates around the world. there are single mandate and dualmandates, etc. it is our sense that a dual mandate has served us well, in particular, the fed has been able at times to speed the recovery from recession and help the people back to work more quickly.

we cannot do anything about long run employment opportunities, but we can help the economy recover more quickly. at the current moment, it doesn't really matter whether we have one mandate or two. we are below our inflation target. unemployment is above for we would like it to be. both sides are pointing exactly in the same direction which is to provide strong accommodation to the economy to help it recover. looking in retrospect, i think that is a hard question. every decision you make is done in real-time and with whatever you know at the time. whatever the experts are telling you about any particular issue, obviously we were slow to recognize the crisis. i was slow to recognize the crisis. in retrospect, it was a traditional classic crisis, but

in a very different guise. we have made it more difficult to see. where there are not we could have prevented or done more about it, that is another question. byuse prices were declining. the time i became chairman. most mortgages have been made. obviously it would have been good to recognize that earlier and try to take more preventive action. that being said, we have done everything we can think of to take actions to stabilize the economy and the financial system. going forward, we are much better prepared for dealing with these kinds of events that when i became chairman in 2006. >> kevin hall.

i would like to indulge in a local question and a broader question. there is a lot of interest as to whether you will retire and write a kiss and tell book. do you envision a role for yourself in south carolina host- chairmanship? your predecessor, dr. greenspan, and his new book argues that long-term investment -- one of the reasons we may be seeing a slow economy is because companies are investing in the sorts of things that make them leaner and get by with fewer people, but not seeing expansion. does it argue for more drastic action on the short-term? >> do you own the charlotte observer? [laughter] most of my family is in north carolina.

i have a number of members in charlotte and also in durham. my wife and i will spend christmas vacation in north carolina. my uncle still lives in dylan. he is 85 and very chipper. [laughter] ok, good. for the immediate future, my wife and i will stay in washington for a bit of time. and that investment, there are a lot of reasons why investment is weaker than we would like. the first most important reason is that the recovery is slow. investment is driven by sales and the need for capacity. with a slow-growing gdp and economy, most firms do not feel pressure on their capacity to do major projects.

there's is also a variety of uncertainties out there. we have fiscal regulatory acts and so on that no doubt affect some of these calculations. we hear that from our participants around the table as a report from local districts. there are a lot of factors. usually you think the way that a deficit or long-term debt would be true of what is crowding out that is raising interest rates. high interest-rate is not our problem right now. there's plenty of credit available at low interest rate. we intend to provide that help --e economy aero and to economy grow andstimulate investment spending. i think that it will take faster overall growth to get firms trying to expand capacity and i think if consumer spending increases as we think it will and export increase as they seem

to be doing, then we will probably see greater investment as well. >> mr. chairman, it has been a pleasure covering you. one of the factors that your policy statement says will be considered in assessing the future pace of asset purchases is the cause and efficacy of those purchases. to what extent or you might say cost-benefits in the calculation tould affected his decision? what extent did that affect today's decision? going forward and looking on the costs side, someone mentioned bubble. to what extent with the whole consideration of threats to financial stability come into play?

>> i will answer your question. and maybe do a better job on the other question as well. we do think of asset purchases as a secondary tool. we do think the cost-benefit ratio on the balance sheet. as it gets large, it moves in a that is less favorable. the costs involved managing the exits from that. it is very unlikely that the fed will have losses in a comprehensive sense. we have stripped profits back to the treasury in 2009. that is about as much as we have delivered to the treasury between a timeline combined.

clearly, the fed is making a good bit of money for the tax payer and for the government. it could be as interest rates rise that we would be in a situation of not -- to the treasury for a couple of years. that would create problems no doubt for the fed in terms of congressional response. there are issues of how well we understand and can manage the effects of asset purchases. importance difference between asset purchases and interest rates is that asset purchases work i affecting what is called a term premium, which is essentially part of interest- rate that investors require as compensation for holding longer- term securities. we do not understand very well what moves the term premium. we saw last summer a big jump in the term premium that was very

destabilizing. it created a lot of stress in the financial markets. there are a number of reasons why asset urges is while effective have been important and are less attractive than interest-rate policy. that is why we have relied primarily in interest-rate use asset purchases as a supplement. i think that there are some financial stability issues involved there. we need to look at the possibility that asset purchases have led to pricing in certain markets by excessive leverage our excessive risk-taking. we do not think that has happened to an extent that is a danger to the system other than when those positions unwind like

you saw over the summer in which they can create some bumpiness and interest rate markets. we try to address it first and foremost by making sure it that the financial system is as strong as possible. that way banks can withstand losses as much as possible and using whatever other tools he have to try to avoid bubbles or other kinds of financial risk. that being said, i do not think that you can completely ignore financial stability concerns. we cannot control them are quickly.-- as quickly. -- perfectly. there might be situations when financial and stability has implications for our mandate. it is a very complex issue.

there'll be many years before central things have completely worked out exactly how best to deal with financial stability questions. you do have to pay some the first linehat. of defense is regulatory. i will tell you at this point though that asset purchases program is well on me that -- ismic and deck this. well on its way to meeting our economic objective and i'm very pleased that we are able to overtime wind down this program and slow the pace of purchases because we have reached our objective rather than because the costs are efficacy issues became important. i think in this case, that is not a concern at this juncture for this program. >> i'm with cnn. you cited a study that said the first $2 trillion in asset

purchases and boosted gdp by about 3% an increased price spectrum employment by 2 million -- private sector employment by 2 million jobs. now your balance sheet is nearing $4 trillion. i'm wondering if you feel a third round of asset purchases gets you as much bang for your buck? do you still think the first study offered a reasonable estimate? >> it is very hard to know in terms of the study. you're try to measure these effects. you have to ask yourself, what would've happened in the absence of policy? it was an interesting study, but it was on the upper-end. that being said, i'm pretty comfortable with the idea that this program did in fact create jobs. i cited some figures. to repeat one of them, the blue chip forecast for unemployment

in this current quarter made before a program were at a certain percentage. that was before the fiscal cliff deal that created even more fiscal headwinds for the economy. of course, we are at 7%. asset purchases made some of the difference. it has helped create jobs. you can see how it works. as a purchases brought down interest and mortgage rates. it brought down car loan interest rate and you have seen a response in those areas as economy has done better. moreover, as has been done in the face of very tight and unusually tight fiscal policy for this period. it has been effect it, but the-- it has been effective but the precisesize of the impact is something that we can very reasonably disagree about and we can ---- and work will continue.

the uncertainty of the impact and the effects of ending programs and so on, one of the reasons we have treated this as a supplementary rather than as a >> don leeol. of "l.a. times." unemployment benefits are expiring shortly for millions of how much of an economic impact do you see that having? what effect would you expect that would have on the unemployment rate? if those people drop out of the labor force, will that not the unemployment rate down quite a bit?>> yes, obviously it has a big economic effect on those directly affected who are receiving benefits.

we do have an unusually large number of long-term, unemployed people in the u.s. it is a major concern and one that i cited in my opening remarks. the effects of extending unemployed benefits is probably not very large. they work in two directions. a one hand, putting the benefits into the system, you will provide additional income and that is spent. that is a positive for growth. on the other side, there are probably some folks who no longer qualify for unappointed benefits will drop out of the labor force and that will send the unemployment rate down, but for the wrong reason. overall, it could have a small effect on the measured unemployment rate.

again, that issue needs to be discussed more in terms of the impact than those most directly affected rather than the overall economy. >> hi. kate davidson from politico. you talked about the centennial review of the fed that the house is undertaking. but that has been under a lot of scrutiny. you talked about the importance of the fed standing up to political rusher. advice do you -- pressure. what advice do youhave or have you given to janet yellen of how to deal with congress? >> excellent question. i think the first thing to agree to is that congress is our boss. the fed reserve is an

independent agency within the government. it is important that we maintain our policy independence in order to make decisions without short- term political interference. at the same time, it is up to congress to set our structure, set our mandate that is entirely legitimate. we need to go and explain ourselves. we need to explain why certain approaches are not so good or how he could be better. obviously they represent the public. they certainly have every right to set the terms of which the fed reserve operates and so on. that being said, i think that we are in fact an effect of central bank. we are near the frontier the transparency. i hope that when they do review the fed, they rely on expertise

and highly qualified individuals who know the ins and outs of monetary policy. those are not simple matters. it would be very interesting to have a thorough discussion of many issues involved that that has engaged in. again, i hope it will be on a high level that uses the best and most qualified people debating what changes, if any, are needed or what is being done right. i'm with the newson the question of longer- hour. term unemployment, how much do you see that as the result of structural changes going on in the economy at this point? to what extent do you think

government can help alleviate that in this environment? >> i think a lot of the declines in the participation rate are in fact demographic or structural and reflecting social logical trends. many of the changes we are seeing now, we're seeing to some degree even before the crisis. we have a number of staff who study those rates and the like. i think a lot of the unemployment decline that we have seen contrary to sometimes of what you hear, a lot of it does come from jobs as opposed to declining anticipation. that being said, it is a portion of a sign of participation that is related to people dropping out of the labor force because they are discouraged or because their skills have become obsolete. they have lost attachment to the labor force and so on.

the fed can adjust that to some extent it were able to get the economy to implement. they might find opportunities to rejoin the labor market. fundamentally, training our workforce to fit the needs of the 21st century industry in the world that we have today is the job of both the private sector and that government sector. we have many strengths, including outstanding universities. the one that we can most directly affect is the skill level of our workforce. it doesn't mean that everyone

has to go get a ph.d. people have different needs and have different interests. unemployment is not something we if we don't address it, we will see a larger number of people unemployed, underemployed, or working at low wages which is not something we want to see. >> thank you. >> thank you. [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] today, the mexican energy sector is discussed live at eight 30 a.m. also, senator john mccain speaks about political turmoil in the ukraine live coverage of his remarks at 11:30 a.m. eastern on c-span three.

she was everyone's soul sister. everyone felt they knew irma and they did pretty much because she laid her life out for everybody to see. us about what life was like in suburbia for women in the 1960s through the 1990s. one of the wonderful things about her -- she wrote mainly humor -- it was humor that was accessible to everyone because it was humor that happened in everybody's lives but they might not recognize it until they saw it written on the page or in the newspaper column. because funny things happen to us all the time, but we have to be on the lookout for them. she was the one that focused our attention on the funny things that happened in a family.

these were things that at the moment seemed like craziness and driving you nuts but when you look back at them, you say that was really funny. that is a real gift. that is a literary gift. >> the life and times of irma bombeck this weekend on book tv. we look at the history and literary life and dayton, ohio, saturday at noon on c-span two and sunday 5 p.m. on c-span three. is next.n journal" at 10:00, discussion on u.s.- result relations and later, the brookings institution looks of the issue of wealthy individuals in the gulf and giving money to syrian rebels. in 45 minutes, senator tom coburn of oklahoma talks about his report on government waste. we will look at the upcoming congressional focus

on tax reform. we will look a.m., at the 2013 survey of the best places to host: good morning. here are your headlines. the senate approved a two-year budget compromise, sending the fudge it -- budget measures to the white house. a presidential advisory panel urged the white house to rein in key parts of the national security agency's program. a programke announced to trim the stimulus efforts of the fed. that is where we will begin with our