Banks need to continue to lend to creditworthy borrowers to earn a profit and remain strong. Ben Bernanke Read Quote
Following an extended boom in housing, the demand for homes began to weaken in mid-2005. By the middle of 2006, sales of both new and existing homes had fallen about 15 percent below their peak levels. Homebuilders responded to the fall in demand by sharply curtailing construction. Ben Bernanke Read Quote
Growth in U.S. real imports slowed to about 3 percent in 2006, in part reflecting a drop in real terms in imports of crude oil and petroleum products. Ben Bernanke Read Quote
Rents should begin to decelerate as the demand for owner-occupied housing stabilizes and the supply of rental units increases. Ben Bernanke Read Quote
To be sure, faster growth in nominal labor compensation does not necessarily portend higher inflation. Ben Bernanke Read Quote
Since World War II, inflation – the apparently inexorable rise in the prices of goods and services – has been the bane of central bankers. Ben Bernanke Read Quote
Deflation is defined as a general decline in prices, with emphasis on the word ‘general.’ Ben Bernanke Read Quote
Sector-specific price declines, uncomfortable as they may be for producers in that sector, are generally not a problem for the economy as a whole and do not constitute deflation. Ben Bernanke Read Quote
The failure of Lehman Brothers demonstrated that liquidity provision by the Federal Reserve would not be sufficient to stop the crisis; substantial fiscal resources were necessary. Ben Bernanke Read Quote
To be sure, the provision of liquidity alone can by no means solve the problems of credit risk and credit losses; but it can reduce liquidity premiums, help restore the confidence of investors, and thus promote stability. Ben Bernanke Read Quote
