Bernanke: Treasuries Still Safe Haven Despite Downgrade
Federal Reserve Chairman Ben Bernanke says U.S. Treasury securities are still a “safe haven” for investors despite Standard & Poor’s downgrading the nation’s credit rating in August.
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“The downgrade didn’t scare off any investors,” and hasn’t done “significant damage” to the economy, Bernanke said today in response to a question at a town-hall event in El Paso, Texas. However, he did say that the U.S. must put forth measures to establish a sustainable path for the national debt amid rising Social Security and healthcare costs.
Whenever financial market volatility increases because of concern over the European debt crisis, “people come in and buy Treasuries, because they view that as really among the very safest and most liquid investments in the world,” Bernanke told soldiers at Fort Bliss.
Earlier in today’s event, Bernanke said the central bank is concentrating “intently” on reducing the unemployment rate, and projects that inflation will stay under control for the “foreseeable future.”
Bernanke recognizes that joblessness in the U.S. is “painfully high,” with more than two-fifths of currently unemployed people having been out of work for longer than six months. That is “by far the highest ratio since World War II,” said Bernanke.
Today’s event is part of Bernanke’s effort to explain Federal Reserve policy decisions to the public, particularly the central bank’s unprecedented bailouts of financial firms and efforts to spur economic growth.