After bitching and moaning on numerous occasions about Congress interfering in monetary policy, Bernanke repeatedly plunges headlong into fiscal policy, hoping to place the blame for the next collapse on anyone other than the Fed.
Please consider Bernanke warns spending cuts could derail recovery
Federal Reserve Chairman Ben Bernanke warned on Thursday that overzealous cuts to government spending in the short term could derail a shaky recovery and said a debt default could wreak financial havoc.
“I only ask … as Congress looks at the timing and composition of its changes to the budget, that it does take into account that in the very near term the recovery is still rather fragile, and that sharp and excessive cuts in the very short term would be potentially damaging to that recovery,” Bernanke told the Senate Banking Committee.
On the second day of delivering the Fed’s semiannual monetary policy report to Congress, Bernanke renewed his warning that a United States debt default would be devastating for the U.S. and global economies.
“It would be a calamitous outcome,” Bernanke said. “It would create a very severe financial shock that would have effects not only on the U.S. economy, but the global economy.”
Failure to raise the debt limit in time would constitute a “self-inflicted wound” to the economy, he added.
Bernanke has warned Congress on excessive budget deficits, warned Congress on reducing deficits too quickly, and warned Congress about not hiking the debt ceiling.
The only things Bernanke has not warned Congress about are motherhood, apple pie, and piss poor decisions by the Fed micro-managing the economy to death.
In short, Bernanke is looking to absolve himself and the Fed of blame when this whole mess blows sky high once again.
Mike “Mish” Shedlock
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