Originally posted by zeeblebotOMG! 😲😲😲
we didn't have a problem economy until the Democrats and their lapdogs (3/4 or 4/5+ of the press) started playing up nonexistent problems and consumers (70 pct of spending) stopped spending.
http://flowingdata.com/2009/01/01/9-ways-to-visualize-consumer-spending/
it's happening again!!! 😲😲😲
http://www.marketwatch.com/story/dollar-slips-in-asian-trade-as-yen-strengthens-2010-08-16?dist=beforebell
Aug. 16, 2010, 4:10 p.m. EDT
Dollar drops after lackluster U.S. data
By Deborah Levine and William L. Watts, MarketWatch
NEW YORK (MarketWatch) -- The dollar fell against the euro and Japanese yen Monday, as reports on manufacturing activity in the New York region and home-builder confidence failed to live up to expectations and reinforced worries that global growth is slowing.
In earlier action, Japan said its gross domestic product slowed during the second quarter.
...
Originally posted by BartsHere it is.
http://www.washingtontimes.com/news/2010/feb/25bernanke-delivers-warning-on-us-debt/
With uncharacteristic bluntness, Federal Reserve Chairman Ben Barnanke warned Congress on Wednesday that the US could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.
Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the US are having increasing trouble selling their debt to investors, show that the US is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr Bernanke said.
"Its not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee. "It is possible that bond markets will become worried about the sustainability (of yearly deficits over $1 trillion), and we may find ourselves facing higher interest rates even today."
It was some of the toughest rhetoric to date about the nation's fiscal and budgetary woes from the Fed chief, who faces a second round of questioning Thursday before a State panel.
Mr. Bernanke for the first time addressed concerns that the impasse in Congress over tough spending cuts and tax increases needed to bring down deficits will eventually force the Fed to accomodate deficits by printing money and buying Treasury bods -- effectively financing the deficit on behalf of Congress and spurring inflation in the process.
Some economists at the IMF and elsewhere have advocated this approach, suggesting running moderate inflation rates of 4% to 6% as a partial solution to the US debt problem. But the move runs the risk of damaging the dollar's reputatino and spwaning much higher inflation that would be debilitating to the US economy and living standards.
Rep. Brad Sherman asked Mr. Bernanke directy whether the Fed would consider such a strategy, especially since the IMF officials endorsed it.
"We're not going to monitize the debt," Mr. Bernanke declared flatly, stressing that Congress needs to start making plans to bring down the deficit to avoid such a dangerous dilemma for the Fed.
"It's is very, very important for Congress and administration to come to some kind of program, some kind of plan that will credibly show how the US government is going to bring itself back to a sustainable position."
Seperately, Mr. Barnanke's predecessor, Alan Greenspan, told Bloomberg News that "fiscal affairs are threatening the outlook" for recovery from recession as Congress and the White House have been unable for years to make tough decisions to raise taxes or cut spending.
He said he is so concerned about a sudden sharp increse in interest rates that every day he checks the interest rate on 10-year Treasury notes and 30 year Treasury bonds, calling them the "critical Achilles' heel" of the economy.
Despite his gloomy testimony, Mr Bernanke dismissed concerns that the US will lose its gold-plated AAA credit rating any time soon. Moody's investors Service recently said that the US rating would come "under pressure" at some point if Congress does not rein in the budget deficit.
The Fed chairman said repeatedly that he unserstands how difficult it will be for Congress to tame deficits by curbing spending in popular programs like Social Security, Medicare and defense, while also considering tax hikes. But he said there would be an immediate payoff; lower interest rates.
"It would be very helpful, even to the current recovery, to markets' confidence, if there were a sustainable, credible plan for a fiscal exit," he said.
A plan that eases market worries by laying out how Congress will address the long-term insolvency of Social Security, Medicare and other entitlement programs also would give Congress more room to take the actions needed today to address the jobs crisis, Mr. Bernanke added.
"There could be a bonus there," he said. "To the extent that we can achieve credible plans to reduce medium - to long-term deficits, will will actually have more flexibility in the short term if we want to take other kinds of action."
Seperately, the debate continued over whether Fannie Mae and Freddie Mac, the two mortgage financing giants, should be included in the federal budget books now that the Obama administration has taken the limits off aid the Treasury Department is prepared to give the companies to keep them solvent.
Republicans, including Rep. Spencer Bachus, the top Republican on the banking committee, have argued that the government is now effectively guaranteeing Fannie and Freddie's nearly $5 trillion of mortgage backed securities and other debt, so their revenues and liabilities should be included in the federal budget as obligations of the government. Taking this step would greatly bloat the federal balance sheet.
Mr. Bachus said he worries that keeping Fannie and Freddie's status off the federal books is "the same sort of financial shell game that has brought governments like Greece to a crisis point".
But Treasury Secretary Geithner, who also testified on Capital Hill on Wednseday, said the administration opposes including the quasi-government entities in the budget, although it lifted the limits on aid to Fannie and Freddie with the intent of assuring financial markets that the US government stands behind their obligations.
"We do not think it is necessary to consolidate the full obligations of Fannie and Freddie onto the nation's budget. But we do think it is very important.....that we make it clear to investors around the world that we will make sure that we will takethe actions necessary" to keep the two entities stable, he told the House Budget Committee.
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This article was written in February of 2010. To be honest, I kinda feel sorry for the Obama appointed Bernanke. He is appointed to give his expertise to the US government and he is time and again ignored. Its like trying to give an intervention to a drunk who simply slugs you over the head and makes you do his bidding.
Then again, perhaps if Obama and Congress know better than the Fed and wind up on the winning side of arguemnts with the Fed, maybe Obama will win an nobel prize in economics to go along with his dazzling peace prize. 😵
See, I read that article and nowhere does it mention that the Fed will NEVER monetize the debt, as you had bolded in your post. What I see is that they said they wouldn't do it, which to any casual observer implies that they wouldn't be doing it at that time.
Which is also a perfectly reasonable course of action. At the time the USA was in a recession, the only reason for expanding the money base in this way would be to finance debt. This would have been a move that damages the reputation of the dollar and would seriously lower trust in the financial situation of the government. At the moment, with economic activity increasing again, a case might be made for expanding the monetary base again to account for this.