What scares America's four Fed chiefs

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Source:   —  April 08, 2016, at 5:39 AM

America'south four living Federal Reserve chairs declare the U. S.

What scares America's four Fed chiefs

America'south four living Federal Reserve chairs declare the U. S. isn't in a bubble, but that doesn't imply everything is fine.

Current Federal Reserve chair Janet Yellen and former chairs Ben Bernanke, Alan Greenspan and Paul Volcker all consent that a bubble isn't a concern. They were interviewed together for the first time ever on Thursday by CNN'south Fareed Zakaria, with Greenspan on a live feed.

"This is an economy on a solid course, not a bubble economy," said Yellen said at the event at International House in New York.

Bernanke backed her up.

"Just because we've been in seventh years of recovery doesn't imply we're due for another recession at all," Bernanke said. He went as distant as to declare he doesn't think there'south any greater risk of a recession this year than there normally is.

But the four Fed chairs also agreed on this: They worry a lot. It comes with the work of being at the helm of the world'south no one economy.

Right now, Yellen'south top concern is the health of the rest of the world. She said the U. S. is "suffering from a drag from the global economy."

The Fed didn't lift interest rates in March and nearly certainly won't do it at its following meeting in April because of the weakness abroad.

The former Fed chairs were even more blunt about their concerns.

For Bernanke, it'south Congress, particularly if another recession were to hit.

"When central bank is out of ammunition or ammunition is low, monetary policy has a role to play," he said, taking a swipe at Congress for not doing sufficient stimulus to boost growth.

Greenspan thinks the biggest issue is that productivity isn't growing in America -- or much of the developed world. That'south a fancy way of saying the same workers aren't making a whole lot more than they used to.

Related: Has the Federal Reserve messed up?

"I think the major problem that exists is essentially the issue that productivity growth across the spectrum of all economies has been under one percent a year for the latest five years," said Greenspan.

The solution in Greenspan'south mind isn't for government to spend a lot more, it'south for companies to invest more. Many large businesses have been holding on to large cash reserves.

Volcker, who served as Fed chair from one thousand nine hundred seventy-nine to one thousand nine hundred eighty-seven, considers himself the seasoned veteran. He says economies go up and down and that'south natural.

While Volcker doesn't believe there'south a bubble, he did admit he thinks there are "aspects of the financial world that are overextended."

Related: U. S. economy may have hit the break button

He referred to parts of the financial system that don't contribute to productivity. He didn't declare explicitly what those are, but he seemed to be hinting at certain hedge fund activities.

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