By Jennifer Liberto
September 30, 2010
Fed Chairman Ben Bernanke told a crowd of schoolteachers in Washington Thursday they can help prevent the next big financial crisis by teaching students personal finance basics of saving and budgeting.
"One of the main lessons of the crisis is we, as citizens, need to be responsible for our own financial dealings," said Bernanke, who asked teachers to make financial literacy an essential part of lesson plans. "We can't put everything on government. We can't put everything on Wall Street. Part of it is our responsibility."
Billed as a "town hall with educators," Bernanke responded to a wide range of questions from middle school teachers to community college professors in Washington and also participating remotely, from different Regional Feds. Most of the questions hinged on ways that teachers should explain the financial crisis and sputtering economy to students.
The Fed chairman stressed the importance of financial literacy several times through the hour-long forum.
"Students need to understand that, for themselves as individuals and for the country, good sound practices in their own financial dealings are really important," he said.
However, Bernanke acknowledged that the Federal Reserve has struggled to figure out a "magic bullet," when it comes teaching financial literacy, saying, "we don't know as much as we would like." He said the Fed has monitored many such programs, and he suggested that some don't work all that well.
He recommended avoiding abstract lessons and using more practical examples that tie into students' lives.
"If kids are involved in opening a savings account or saving for college, those things mean a lot more to them," Bernanke said.
In response to several questions about how to teach students about the role of the media when it reports on the economy, Bernanke urged teaches to train students to be "skeptical" and to think for themselves and gather information from a variety of sources.
"You'll avoid that echo chamber that makes the good times seem too hot and the bad times seem too cold," he said.
Teachers also asked him about the current economic malaise and high unemployment rate. He explained that recoveries following financial system failures tend to be slow and pointed out that the recession was declared over in June 2009, which means the economy has at least stopped contracting.
"It doesn't mean we're back to normal. It doesn't mean that unemployment isn't way too high or that people aren't suffering," Bernanke said. "But it does mean we are growing and the economy is moving, perhaps not as quickly as we'd like. But it is moving in the right direction."