Bernanke on stage as finance ministers meet in Wyoming
U.S. Federal Reserve Chairman Ben Bernanke will of course be among them, addressing the group in a Friday morning speech. Those attending likely want to hear which moves Bernanke will take next to ensure that the nascent economic recovery, like those witnessed in countries such as Germany and France, takes hold.
For Bernanke the stakes are high. Having largely been given credit for engineering a program to prevent a worldwide economic calamity, he must convince finance ministers and investors worldwide that he can rebuild the U.S. economy without harming those of other countries.
What is clear to many people, including Christy Huebner Caridi, a professor of economics at Marist College in Poughkeepsie, N.Y., is that Bernanke deserves credit for staving off a worldwide financial crisis.
By flooding the financial system with billions of dollars, the Fed chief assuaged concern among investors and consumers that there could be too little money in the system to convert stocks, bonds or other financial instruments, into cold, hard U.S. cash, thereby averting a panic.
As Bernanke himself pointed out in testimony before Congress, Caridi said, paraphrasing his comments, "People don't know how close we came to the entire system crashing."
It was a bold move that worked, Caridi said. "Since people know that they can have money anytime they want it, they don't want it anymore, and they will stand back."
The cash infusion was only one of many steps the Fed chairman took to avert disaster.
It is too soon for anyone to gauge whether any of Bernanke's decisions were bad ones, she said. That may bode well for him as he seeks a second term as Fed chairman.
It isn't yet known if President Barack Obama will renominate Bernanke, whose term expires Jan. 31. Obama's predecessor, George W. Bush, didn't nominate the former Princeton professor to the Fed post until late October 2005, just as previous Fed chief Alan Greenspan was winding down his final term.
Though Bernanke appears to have brought the economy back from the brink of collapse, there is still much to do. U.S. unemployment, at 9.4 percent, is high and is expected to remain so for months to come.
What would help many Americans in finding work again is if the value of the dollar were to drop in relation to other currencies. That would result in more exports and fewer imports leading to economic growth in part because it would help keep stimulus funds in the country, where they do the most good, Caridi said.
"For every dollar it could create two or three dollars worth of income in the system as it moves its way through," she said, adding that only happens, however, if the money is spent on goods and services in the domestic economy.
If it's used to buy, say, a coffee maker made in China, the stimulus goes overseas, and Americans don't see it.