ECONOMIC RECOVERY

Bernanke: Interest Rates Must Rise

Denies low rates in 2000s caused housing bubble.

Federal Reserve Chairman Ben Bernanke said Sunday that the U.S. must be willing to raise interest rates if it wants to prevent a repeat financial crisis. Bernanke stressed that the first and best solution was to ensure that there is strong regulation in place, but monetary policy would be enforced if regulation wasn't sufficient. Critics have blamed low interest rates for fueling the bubble that led to the crash, and are now worried that the current low rates mean that a new bubble could already be in the works. Dale Jorgenson, Bernanke's thesis adviser while at MIT, agreed with Bernanke's analysis that low interest rates weren't to blame, and said that Congress should take more responsibility for enabling irresponsible lending in its effort to increase homeownership. Bernanke announced that his strategy moving forward is to raise the interest rates on reserves and enact measures that "will allow us to drain reserves from the system."