Ben Bernanke and the Case of the Missing Jobs by Gary North

Bernanke's speech on March 26 began with a familiar analytical error. Specifically, he continued to give the impression that the Federal Open Market Committee (FOMC) is the cause of today's low short-term interest rates. It isn't. The .25% rate is the result of Federal Reserve policy, but not FOMC policy. The FED pays commercial banks .25% on excess reserves. If it did not pay an interest rate of .25%, the rate would be even lower. He always gives the impression that, without the FED's intervention, rates would be higher.
The causes of today's low rates are the widespread decisions of commercial bankers to hold excess reserves with the FED, which is what the FedFunds rate reflects. Banks are not borrowing overnight money from other banks in order to meet bank reserve requirements set by the FED. They do not need the money. They have plenty of excess reserves. So, because there is no rival demand for this money, banks put their money with the FED, which pays .25%. Better to earn something than nothing.
THE LABOR MARKET
His speech focused on the rate of unemployment, as well it should. This rate is also called the "Presidential incumbent's chance in election years." In the post-World War II era, an unemployment rate above 7% at the time of the election is the kiss of death.
Bernanke said this: "We have seen some positive signs on the jobs front recently, including a pickup in monthly payroll gains and a notable decline in the unemployment rate." The unemployment rate is 8.3%. "That is good news." For Republicans, yes. Not for Obama.

Importantly, despite the recent improvement, the job market remains far from normal; for example, the number of people working and total hours worked are still significantly below pre-crisis peaks, while the unemployment rate remains well above what most economists judge to be its long-run sustainable level.

Correct on both points. "Of particular concern is the large number of people who have been unemployed for more than six months." Also correct. Not having anything else to do, they are likely to vote in November.
He raised the question of whether this unemployment is cyclical or permanent. He defines "cyclical" as every Keynesian does, that is, incorrectly: the result of a temporary lack of aggregate demand. "Is the current high level of long-term unemployment primarily the result of cyclical factors, such as insufficient aggregate demand. . . .?"

Ben Bernanke and the Case of the Missing Jobs by Gary North