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Federal Reserve Chairman Ben Bernanke testified before Congress this morning with additional plans to help stimulate U.S. economic growth to solidify his stance on creating a stronger economic recovery plan.

“Monetary policy can be a powerful tool, but it is not a panacea for the problems currently faced by the U.S. economy.  Fostering healthy growth and job creation is a shared responsibility of all economic policymakers, in close cooperation with the private sector,” Bernanke explained with stellar word choice.

Seriously.  When was the last time you used the word “panacea” in a sentence?

More or less, Bernanke justified that the previously announced “Operation Twist” is a step in the right direction, but much more will be needed in order to achieve fiscal sustainability.  After all, the economy is growing slower than the Fed expected and much more help is need to bolster the economy.

Bernanke expressed to Congress the importance of fiscal policy, but stressed that other policies, specifically in relation to labor markets, trade, taxation, housing and regulation, have equal importance as well.

Bernanke stated, “A second important objective is to avoid fiscal actions that could impede the ongoing economic recovery.  Putting in place a credible plan for reducing future deficits over the longer term does not preclude attending to the implications of fiscal choice for the recovery in the near term.”

With regard to the financial stresses in Europe and across the globe, Bernanke explained, “The Committee will continue to closely monitor economic developments and is prepared to take further action as appropriate to promote a stronger economic recovery in the context of price stability.”

So how does this all relate to the housing market?

Well, in theory, the implementation of Operation Twist would help keep mortgage rates low and help foster economic growth while catering to larger businesses to keep purchasing.  Bernanke still stands strong in his theory that reinvesting principal payments on mortgage-backed securities would create a stronger economic recovery.

Plan to hear more about combined efforts of the Fed and Congress to help jump start the economy.  The central bank’s next meeting is scheduled for November 1, 2011.

To read the transcript of Bernanke’s speech before congress, click here.

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