<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Caroline Baum</p>&#xD; <p>Anyone looking for some tangible policy prescriptions from Federal Reserve Chairman Ben Bernanke's opening remarks at the Kansas City Fed's Jackson Hole symposium will be sorely disappointed.</p>&#xD; <p>Oh, there were policy prescriptions all right -- mostly for the folks who set tax and spending policy. Bernanke recommended a "better process" for making fiscal decisions, including transparent budget goals and enforcement mechanisms. (Compared with the debt-ceiling free-for-all, anything looks like a process.)</p>&#xD; <p>As for monetary policy, which many analysts have called the only game in town because of budgetary constraints, Bernanke had little to offer: We have tools for additional stimulus, we don't know whether we'll use them, and we'll talk more about it at our next meeting September 20-21. That session was planned originally as a single-day affair; the addition of an extra day fanned new hopes that the toolbox was being readied for action.</p>&#xD; <p>One tool was put into operation at the Aug. 9 policy meeting: "forward guidance." The Fed pledged to keep the benchmark rate near zero at least through mid-2013. The yield on the two-year Treasury note dropped a mere 7 points in response, suggesting Mr. Market had already figured that out.</p>&#xD; <p>The first half of Bernanke's speech was a walk down memory lane. He reminded us how we got here (the worst financial crisis since the Great Depression); and why we're stuck here (housing, the usual cyclical leader, is still flat on its back).</p>&#xD; <p>The second part was devoted to the future. Bernanke thinks the U.S. still has the unique combination of forces that have allowed it to thrive in the past -- a market economy, an entrepreneurial culture, flexible labor and capital markets and technological innovation. Restoring the economy to its long-run growth potential will require stabilizing the debt relative to national income and enacting tax and spending policies that create incentives to work and invest.</p>&#xD; <p>Back to you, President Obama.</p>&#xD; <p>(Caroline Baum is a Bloomberg View columnist.)</p>&#xD; <p> <br></br> </p>&#xD; <p> <br></br> </p>&#xD; <p> <br></br> </p> </body> </html>