Bernanke the Teacher, Talking to Teachers

Janet Yellen will take the stage Thursday morning in what is effectively her debut as the Federal Reserve’s new leader. But the job still belongs to Ben S. Bernanke, who on Wednesday night held a low-key question-and-answer session with teachers.

Mr. Bernanke said nothing that is likely to move financial markets in the morning. He was not trying to communicate with the investors who determine the success of the Fed’s policies. Instead, he was pursuing a goal that may set him apart from his predecessors more completely than anything else he has done over the last eight years: He was once again trying to explain monetary policy to the general public.

It has long been clear that Mr. Bernanke is a teacher at heart. On Wednesday night the Fed’s chairman described himself as “a former school board member, a college professor, a textbook author” and the husband of a longtime Spanish teacher.

He has sought to demystify the Fed through regular news conferences, extended interviews with “60 Minutes” and other media outlets, in a series of lectures delivered at George Washington University and, as on Wednesday night, in question-and-answer sessions with teachers, soldiers and college students.

In part he has reached out to the public in an effort to dampen criticism of the Fed’s response to the financial crisis. But his goals run much deeper. He believes that monetary policy is more powerful when people understand what the Fed is doing. Financial literacy also helps build wealth and a better life, he said. And for those reasons, improved understanding “is good for the country and the economy.”

In the service of this goal, Mr. Bernanke offered careful and plodding answers to familiar questions. Unemployment is too high. Inflation is too low. “The economy is on the cold side.” The Fed is trying to help but there are limits to its power.

How can monetary policy be explained to an 11th grader in an exciting way?

“I’d start by making sure that 11th grader understood about interest rates.”

O.K., so it’s not going to be easy.

What might help? Mr. Bernanke noted that students enjoy role-playing, and can learn by simulating the process of applying for a bank loan, or insurance.

He also cited the importance of teachers “who model commitment and dedication.”

Asked for examples from his own life, he spoke first about his high school marching band teacher - Mr. Bernanke played the saxophone - then about a college professor who hired him as a research assistant, and about Stanley Fischer, one of his graduate school professors at the Massachusetts Institute of Technology who inculcated a commitment to public service and then went into public service.

Asked about his own legacy, Mr. Bernanke talked about the Fed’s success in arresting the financial crisis, and its creative but less successful efforts to revive the economy. He said he wished he was stepping down with the unemployment rate back around its 5 percent historical average, rather than up around 7 percent.

Then he closed by saying the Fed was now a more transparent institution.