Bernanke Warns Deficits Threaten U.S. Financial Stability

June 3, 2009 by · Leave a Comment
Filed under: Policy News 

Why is it that we have to go with far to realize in a system where you issue debt to issue money, deficits actually matter.  We have known this for decades, but now some how we have now figured this out.  Obama is going to either cut back his budgets or make serious cuts in other places to make his goals happen.  The other option that I have been looking into is changing the way we “issue” our money.   The days of the private Federal Reserve are numbered and I see the “Greenback” coming back.

News (Bloomberg):

Federal Reserve Chairman Ben S. Bernanke said large U.S. budget deficits threaten financial stability and the government can’t continue indefinitely to borrow at the current rate to finance the shortfall.

“Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,” Bernanke said in testimony to lawmakers today. “Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance.”

Bernanke’s comments signal that the central bank sees risks of a relapse into financial turmoil even as credit markets show signs of stability. He said the Fed won’t finance government spending over the long term, while warning that the financial industry remains under stress and the credit crunch continues to limit spending.

The Fed chief said in his prepared remarks to the House Budget Committee that deficit concerns are already influencing the prices of long-term Treasuries.

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