Ben Bernanke: Slow productivity growth is weighing on US economy

Former Fed Chairman Ben Bernanke told CNBC on Monday that slow productivity growth is weighing on the economy. He also said there's been too much reliance on the central bank to support the economy, and other policymakers in the government need to step up.

With the Fed considering an interest rate hike that would be the first in nine years, the lower growth in the U.S. economy is not a hangover from the Great Recession, Bernanke said, noting that more capital investment is needed to boost growth.

In the long term, low or no inflation has risks, he warned. "If inflation is so very, very low that it's close to deflation. The risk is that ordinary interest rates will be low all the time. ... What happens where there's a recession, there's no where to cut."

However, he insisted that the Fed should not have hiked already. "That doesn't make any sense. If you raised rates too early and kill the economy, that doesn't help you," he said.

Growth has certainly been slower around the world, but the U.S. economy has been doing better than others, Bernanke said, evidence the Fed's monetary policy since the financial crisis has been correct.

"The Fed has been using easy money because the economy has needed a lot of support," he argued. "A better policy would be a better mix of monetary, fiscal, and other policies. The fact that the Fed is the only game in town means the Fed has to do too much."

When Bernanke took the Fed helm, stocks and the housing market were soaring to record heights, but not long after that he had to help rescue the nation from the brink of financial collapse.

Charting the course of Bernanke's tenure at the Fed, from the day he took the reins from Alan Greenspan until the day he passed the torch to Chair Janet Yellen, the Dow Jones industrial averagegained about 45 percent. But from the depths of the Great Recession in 2009 until Bernanke's departure, blue chips more than doubled.

Source: CNBC