10 Questions for Ben Bernanke

The Fed chairman was TIME's 2009 Person of the Year. Ben Bernanke will now take your questions

By Ben Bernanke Monday, Dec. 27, 2010
    • Manuel Balce Ceneta / AP

    Federal Reserve Chairman Ben Bernanke

    How have things changed for you since being chosen as TIME's Person of the Year in 2009 ? — Sonia Smith, NEW ORLEANS
    It was a great honor, which I very much appreciated. I continue to face challenges at the Federal Reserve, [and we're] doing what we can to help our economy get back to healthy growth.

    Will we ever be able to pay off the national debt, or are we beyond the point of no return? — Michael Lawrence, LAS VEGAS
    This is a moment of opportunity. It's critically important for us as a country to take measures to restore a long-term balance between our spending and our taxes. It's possible, but it's going to take political will and determination.

    Let's tackle the basics: What's the economy's biggest problem, and how do we fix it? — Ahmo Mehmedovic, EVERETT, MASS.
    First, jobs. We have too many people unemployed. There's no quick solution. The Federal Reserve has set monetary policy to try to help the economy grow. The second biggest problem is our long-term fiscal deficit. It's very important that Congress work to achieve a better balance in the long term. Failing to do so would stunt growth and increase the risk of financial crisis.

    On 60 Minutes, you acknowledged the growing income inequality in this country. What are ways to close the gap? — Kelli Drenner, PAWTUCKET, R.I.
    Income inequality is troubling because, among other things, it means that many people in our society don't have the opportunities to advance themselves. The best solution to income inequality is providing a high-quality education for everybody. In our highly technological, globalized economy, people without education will not be able to improve their economic situation.

    Several countries have expressed a wish to replace the dollar as the world's foremost reserve currency. What do you think about that? — Calle Ekdahl, GÖTEBORG, SWEDEN
    I think the dollar will remain the leading reserve currency for the foreseeable future. Countries continue to hold the great majority of their reserves in dollars. We have the advantage of having very deep and liquid financial markets.

    How do you think China will change the global economy? — Julius Berger, BECKUM, GERMANY
    China is growing very quickly and is clearly becoming an important player in the world economy. One of the things they'll need to do is allow their currency to take on a value closer to that determined by the marketplace, to allow a more balanced pattern of trade in the world.

    Would it be beneficial to the economy if I created new dollars out of thin air whenever I wanted? If it isn't good for me to do it, why is it good for you and the Fed to create new money at whim? — Jonathan DuPree, MARTINSBURG, W.VA.
    The Federal Reserve is buying Treasury securities in order to lower interest rates, which in turn helps people buy houses and cars and promotes investment by firms. That leads to a stronger economy. These policies are not leading to increases in the amount of currency in circulation.

    What will it take for the American public to gain a renewed trust in our banking institutions? — Anthony Holub, JOLIET, ILL.
    It will take some time. Banks will have to win the confidence of their customers through fair dealing, making good loans and remaining financially healthy.

    Is America's the best economic system out there? — John Meidl, DENVER
    Our economic system, which is based on free markets guided, where appropriate, by regulation, has proved the most successful in history in terms of creating wealth for the population.

    What is the single most important thing you have learned in your time as Fed chairman? — Lewis Cohen, MELBOURNE, AUSTRALIA
    We have to pay attention to the lessons of history. If you look at the history of financial crises, it shows that an aggressive and creative response is the best way to ensure minimal damage to the economy.