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Bernanke Begs Congress To Address “Fiscal Cliff”, Pledges To Hold Interest Rates Near Zero Through Mid-2015 Even If Economy Picks Up
Fed Chairman Ben Bernanke was yapping about jobs today in his speech Five Questions about the Federal Reserve and Monetary Policy in Indianapolis.
Bernanke asked five questions of himself and gave five self-serving responses, all absolving the Fed of its role in the global financial crisis.
Bernanke also patted himself on the back numerous times (indeed in the answers to nearly every question).
In particular, Bernanke bragged about the inflation-fighting prowess of the Fed, not pointing out the Fed and fractional reserve lending are the source of inflation.
Direct Lies
In the direct lie category, Bernanke stated “The Federal Reserve is also very open about its finances and operations.“
In reality, it took freedom-of-information lawsuits from Bloomberg and others to get information from the Fed. The Fed still does not want to be audited.
Here are a couple of key snips regarding monetary and fiscal policy.
Pledge To Hold Rates Low
In the category of communications policy, we also extended our estimate of how long we expect to keep the short-term interest rate at exceptionally low levels to at least mid-2015. That doesn’t mean that we expect the economy to be weak through 2015. Rather, our message was that, so long as price stability is preserved, we will take care not to raise rates prematurely. Specifically, we expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens. We hope that, by clarifying our expectations about future policy, we can provide individuals, families, businesses, and financial markets greater confidence about the Federal Reserve’s commitment to promoting a sustainable recovery and that, as a result, they will become more willing to invest, hire and spend.
Bernnake Begs Congress to Address “Fiscal Cliff”
I certainly don’t underestimate the challenges that fiscal policymakers face. They must find ways to put the federal budget on a sustainable path, but not so abruptly as to endanger the economic recovery in the near term. In particular, the Congress and the Administration will soon have to address the so-called fiscal cliff, a combination of sharply higher taxes and reduced spending that is set to happen at the beginning of the year. According to the Congressional Budget Office and virtually all other experts, if that were allowed to occur, it would likely throw the economy back into recession. The Congress and the Administration will also have to raise the debt ceiling to prevent the Treasury from defaulting on its obligations, an outcome that would have extremely negative consequences for the country for years to come. Achieving these fiscal goals would be even more difficult if monetary policy were not helping support the economic recovery.
