You need to know that when Bernanke says “costs,” he means “risks.” And in describing costs, he sometimes actually uses the work risks, as he does here: “A third cost to be weighed is that of risks to financial stability.” But in some cases he uses the word cost when he means risk, as next: “A fourth potential cost of balance sheet policies is the possibility that the Federal Reserve could incur financial losses should interest rates rise to an unexpected extent.” Most of us speculators would call this a risk of loss, not a cost. Bernanke’s an economist, which … Continue reading Bernanke IS Gambling, and He Admits It