Fed chief warns Congress to act quickly
WASHINGTON: The Federal Reserve chairman, Ben Bernanke, told lawmakers Tuesday that the United States could be in for "a prolonged episode of economic stagnation" if they did not forcefully address the nation's financial crisis, but he quickly encountered deep anger, particularly over government support for American International Group.
Rumor has it that he also urged quick action down at the local Department of Motor Vehicles when attempting to renew his license. It was met with similar anger. I should know. I'm starting the rumor, lol.
Bernanke told the Senate Budget Committee that the worst outlook, should action on the crisis come too slowly, would be "further deterioration in the fiscal situation" and probably "lower output, employment and incomes for an extended period."
The worst outlook is merely an extension of what has already happened? Good to know!
"Mr. Chairman," Senator Ron Wyden, Democrat of Oregon, asked at the outset, "at what point will the taxpayer no longer be on the hook for the massive AIG failure? What is the end game for American taxpayers?"
This game started in 1971 when we fell off the gold standard. There is no end game. It is inflate or die.
Gross Federal Debt Held by the Public (Log Chart)
Stag,
ReplyDeleteIt is inflate or die.
I was thinking it is inflate AND die.
I really want to see how they inflate wages. If they can't, inflation should cause many things to die - CONsumer spending, house prices, debt payments, jobs, etc.
I imagine other items, like oil prices, will be healthy though. All in all, I just don't see inflation as a solution.
One more thought. Internally generated inflation is bad, but at least it is all in the family so to speak. I have a hunch that externally driven inflation is really bad.
If China gets its economy roaring due to internal demand and the world starts readily accepting the yuan, the inflation we would feel would be extremely painful. That's not a comforting thought.
mab,
ReplyDeleteOne more thought. Internally generated inflation is bad, but at least it is all in the family so to speak. I have a hunch that externally driven inflation is really bad.
I am in 100% agreement with your hunch!
Here's the thinking. Externally driven deflation was REALLY good for us. It seems highly unlikely that the opposite of something REALLY good for us will also be really good for us.
There's some hope from a mathematical perspective though. What if externally driven deflation wasn't really good for us, but only appeared to be good for us. That could mean that externally driven inflation will only appear to be bad for us.
As we lose our jobs and people can't afford to eat, we might be actually doing better than we think we are. Sigh.
Stupid, stupid theory. Nevermind.