WASHINGTON (AP) -- Federal Reserve Chairman Ben Bernanke is stepping up his defense of the Fed's $600 billion Treasury bond-purchase plan, saying the economy is still struggling to become "self-sustaining" without government help.
In a taped interview with CBS' "60 Minutes" that aired Sunday night, Bernanke also argued that Congress shouldn't cut spending or boost taxes given how fragile the economy remains.
The Fed chairman said he thinks another recession is unlikely. But he warned that the economy could suffer a slowdown if persistently high unemployment dampens consumer spending.
The interview is part of a broad counteroffensive Bernanke has been waging against critics of the bond purchase plan the Fed announced Nov. 3. The purchases are intended to lower long-term interest rates, lift stock prices and encourage more spending to boost the economy.
Critics, from Republicans in Congress to some officials within the Fed, say they fear the Fed's intervention could spur inflation and speculative buying on Wall Street while doing little to aid the economy.
On other issues in the "60 Minutes" interview, Bernanke:
-- Argued that unemployment would have been far higher -- "something like it was in the Depression, 25 percent" -- had the Fed not provided extraordinary aid to Wall Street firms, banks and other companies to ease a credit crisis.
-- Said it could take four or five more years for unemployment, now at 9.8 percent, to fall to a historically normal 5 percent or 6 percent.
-- Reiterated that the Fed is prepared to buy even more than $600 billion in Treasury bonds over the next eight months, should it decide the economy needs the fuel of even lower interest rates.
-- Argued that the risk of inflation is overblown. Bernanke said he's "100 percent" confident the Fed will be able to ward off inflation, when the time is right, by raising interest rates and unwinding its stimulative programs.
-- Called the risk of deflation -- a prolonged drop in prices, wages and the values of homes and stocks -- "pretty low." He said the likelihood would have been greater if the Fed weren't maintaining super-low interest rates.
-- Urged Congress to improve the nation's tax code "by closing loopholes and lowering rates" for individuals and companies. He said doing so would create greater incentives for people to invest.
In material from the interview that didn't make CBS' broadcast but was later posted online in video form, Bernanke reiterated his view that an artificially low Chinese currency is "bad for the American economy because it hurts our trade."
It isn't helpful for China, either, he said, because it makes it harder for Beijing's policymakers to keep China's economy and inflation from overheating.
Critics who fear the Fed's bond purchases are raising the risk of inflation have complained that the purchases mean the Fed is, in effect, printing more money. In the interview, Bernanke called that a "myth." He insisted the Fed isn't printing money when it buys Treasurys and said the program won't expand the amount of money in circulation in a "significant way."
Lou Crandall, chief economist at Wrightson ICAP, said Bernanke is right that the Fed's purchases won't significantly change the amount of money circulating in the economy. That's mainly because banks aren't lending most of the money they already hold in reserve. When the Fed buys Treasurys, it increases the reserves in the banking system. For those reserves to actually "create" money, the banks would have to lend it.
Still, Crandall suggested that the bond-buying program creates the appearance of printing money, something that could put the central bank's credibility at stake.
Bernanke's appearance Sunday night is part of a public-relations blitz he's mounted since the Fed announced the program Nov. 3. In private and public appearances, Bernanke has sought to explain and defend the program to ordinary Americans, investors and lawmakers on Capitol Hill.
His efforts have included an Op-Ed article in The Washington Post and discussions with students in Jacksonville, Fla., economists in Jekyll Island, Ga., business people in Columbus, Ohio, central bankers in Europe and members of the Senate Banking Committee.
Criticism has come from both home and abroad. Officials in China, Germany, Brazil and other countries have argued that the Fed's plan is a scheme to give U.S. exporters a competitive edge by keeping the value of the dollar weak. A weak dollar makes U.S. goods cheaper abroad and foreign goods more expensive in the U.S.
It's rare for a sitting Fed chairman to grant an interview, whether for broadcast or print. But this was Bernanke's second appearance on "60 Minutes." His first was in March 2009. At the time, he was facing anger over Wall Street bailouts and rising anxiety about the economy.
In the interview that aired Sunday, Bernanke pointed out that the economy is growing at an annual pace of around 2.5 percent -- far too slow to reduce unemployment. For a self-sustaining recovery, consumers and businesses would need to spend more, so the economy could grow faster.
Bernanke has said he hopes the Fed's bond-buying program will help lift stock prices. In part, that's because lower yields on bonds would cause some people to shift money into stocks.
Higher stock prices would boost the wealth and confidence of individuals and businesses. Spending would rise, lifting incomes, profits and economic growth. Bernanke has referred to this as a "virtuous cycle."
But when asked in the interview whether the recovery is self-sustaining, Bernanke responded: "It may not be. It's very close to the border."
Given the economy's still-weak growth, he said: "We're not very far from the level where the economy is not self-sustaining."
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