I must have missed this or tuned it out while watching the videos of Bernanke testimony. Here is a quote from Senator Tim Johnson’s opening statement from the February 2013 hearing with Bernanke reformatted compared to the source to make it easier to read here – but the statement hasn’t been altered in any way):

In response to unsustainable fiscal policies here and abroad, central bankers throughout the world have turned to unconventional monetary policies over the past few years.

Near-zero interest rates, large-scale asset purchases and record-size central bank balance sheets have become the norm.

However, some authorities have become concerned that costs of prolonged easy-money policies outweigh the benefits.

In its annual report released last June, the Bank of International Settlements laid out the risks entailed with the worldwide expansion of central bank balance sheets and their extended low interest rate policies.

Not only did the report conclude that such actions “may delay the return to a self-sustaining recovery,” but they create “longer-term risks to [central banks’] credibility and operational independence.”

More recently, the minutes of the Federal Open Market Committee’s (FOMC) January meeting show that several FOMC members expressed concern that the Fed’s prolonged easy-money policies could result in excessive risk-taking and threaten the financial stability of the United States.

These concerns warrant serious consideration, given the scale, scope and duration of the Fed’s unconventional monetary policies.


And, primarily as a result of its large-scale asset purchases, the Fed has ballooned its balance sheet to more than $3 trillion and it is still growing.

I look forward to hearing from Chairman Bernanke about the concerns raised about the risks of the Fed’s prolonged easy-money policies and why they cannot overcome bad fiscal policy.

I also look forward to hearing from Chairman Bernanke about how the uncertainty surrounding Dodd-Frank implementation is hampering our recovery.  In particular, what specific legislative fixes can be done to remove this uncertainty?

I don’t know what Bernanke said in response to the question regarding the concerns of BIS, but it is doubtful it cleared the air about whether the current stance of policy is indeed easy. I think in order to have prolonged easy money policies, we have to get to having easy money first. No? Perhaps the question should have been phrased differently, as a direct question about the current stance of monetary policy and how to tell whether policy is easy or tight.

It’s very hard to tell how much Senator Johnson is influenced by BIS and/or the members on the FOMC who believe that there is never any state of the universe that money could be too tight; although given the taper chatter that started to surface publicly shortly after this hearing, it might be more than even Mr. Johnson would care to admit.