The question was [paraphrasing], "Isn't encouraging more credit to overleveraged borrowers essentially like giving a drunk a bottle of whiskey and pronouncing him cured?"
Zimbabwe Ben didn't show signs of recognizing Denninger's name, and gave the usual political blah-blah-blah answer.
UPDATE: Here's the transcript:
JIM LEHRER: Got an e-mail, Mr. Chairman. This is from is Carl Deninger in Knoxville, Florida. The question is, "Since this crisis began with people unable to pay their bills and continues to be marked by this problem, how does expanding credit solve the problem? Isn't that going to be like giving a drunk a bottle of whiskey and calling him cured"?
BEN BERNANKE: Well, we have a case here of overreaction. It's true to some extent that this crisis was caused by too much credit, credit that was too risky, too easy. That's all true. But the financial crisis has caused a huge reaction in the other direction. And if you're - if you have a small business and you've tried to get a loan, you know that credit is very, very tight right now. We need to have sort of a middle course between credit that is excessively risky, excessively easy, and credit which is so tight that legitimate borrowers can't get credit.
The Federal Reserve has been working hard on this in a lot of ways. First, we've cut interest rates all the way to zero, the short-term interest rate, the one that we control. We've then worked with banks to try to increase their lending. And we have a whole set of programs. Let me just talk about one. We have a program that lends to investors who want to purchase consumer or small business loans from banks, and that puts more money into the system. And what we've found is that this program has brought down auto loan interest rates. We've helped finance 1.6 million auto loans. It's helped a lot in small business loans. We've financed about 600,000 small business loans. And so we have actually intervened in the market to try and get the credit markets working again.
So we had too much credit. It was too risky. It was too excessive. Now we've got to bring things back to sort of a nice middle ground.
Just thinking out loud here, but WTF is wrong with cash? Do we really want an economy that requires ever-increasing debt? I'm doing my part to shrink consumer credit right now by paying off the car and never borrowing again. If it requires debt, I don't need it.
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