The head of the Federal Reserve has defended the central bank's decision to buy about $600 billion in government debt in an effort to improve the nation's economy.
Ben Bernanke, in an interview on CBS' "60 Minutes," said that the United States is on the "border" of another recession, and more action from the Federal Reserve may be needed to help the economy rebound. The Fed chairman said that it is "certainly possible" that the bank will expand its purchase amount in an attempt to lower the nation's jobless rate and to minimize the risk of deflation in consumer prices.
"At the rate we're going, it could be four, five years before we are back to a more normal unemployment rate. Somewhere in the vicinity of say 5 or 6 percent," Bernanke said during the interview, according to media reports.
Critics of the Federal Reserve's plan believe that the purchase of government bonds is not necessary because there have been signs of improving growth in the U.S. economy. Many financial experts warn that the bank's action could drive up inflation. The Christian Science Monitor reports that investors have already raised the price of gold since the Fed's latest announcement of bond purchases.
In response to Bernanke's televised appearance, the National Inflation Association (NIA) said that the Fed's plan to print more money is going to fund non-productive and wasteful government spending. In a statement, the NIA said that it is more likely that the U.S. unemployment rate will reach Great Depression levels within five years rather than fall, as Bernanke predicted.
The organization believes that Americans should prepare for hyperinflation because of the Fed's "dangerous and destructive actions."