The Fed finally steps up and tells Congress they need to get their ? together
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bornnraisedoffCMR
Members Posts: 1,073 ✭✭
http://theeconomiccollapseblog.com/archives/federal-reserve-chairman-ben-bernanke-warns-congress-that-the-federal-reserve-will-not-print-money-to-pay-for-the-exploding-u-s-national-debtOn Wednesday, Federal Reserve Chairman Ben Bernanke warned Congress that the Federal Reserve does not plan to "print money" to help Congress finance the exploding U.S. national debt. In fact, Bernanke told Congress that the U.S. could soon face a debt crisis as bad as the one in Greece if the U.S. government does not get things in order financially. This represents a fundamental change in policy for the Federal Reserve, because they have been enabling the massive borrowing by the U.S. government over the past couple of years by "buying" the majority of new U.S. government debt that has been issued. But now the fat cats over at the Federal Reserve have apparently changed their minds. Using uncharacteristic bluntness, Bernanke told Congress that the Federal Reserve is "not going to monetize the debt".
So why is the Federal Reserve changing course?
Well, there are a couple of possibilities. One is that the Federal Reserve could legitimately be concerned that the exploding U.S. debt could actually collapse the U.S. economy and ultimately the U.S. government.
You see, the Federal Reserve is a parasite. They make money for their owners by sucking money out of the U.S. government and out of U.S. taxpayers. So, just like any parasite, they must strike a delicate balance. They have to keep feeding off the host without killing off the host completely. If the host dies it could end up killing the parasite. So the Federal Reserve actually needs to try to keep the U.S. economy alive so that it can slowly keep draining it.
In fact, during his remarks to Congress, it certainly sounded like Bernanke honestly desires that the U.S. government will come up with a sustainable financial plan for the future....
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illuminati
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So basically we're ? .
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DarcSkies777 wrote: »So basically we're ? .
Not at all in the long run the economy will fix itself like it always does in the short run its like me giving you $10 every week more than likely you are going to spend $10 every week frivolously because you know you are going to get another $10 so when I say I am no longer giving you $10 you will spend that last $10 I gave you more wisely. good move -
DarcSkies777 wrote: »So basically we're ? .
Nah, this is actually a good thing. I've always feared that the Fed would cave in to the politicians and monetize our debt once the Chinese, ? , U.S. treasury buyers, etc stop purchasing out Bonds. But they are signaling that they will not monetize (print money).
This will force Congress to drastically cut spending, balance the budget, and trimm the fat on the govt, and start paying back the trillions of dollars we oh. -
:tu @ the Killap and Born posts. Makes sense. But one has to wonder why the hell they allowed them to spend like crazy in the first place and just printed money instead.
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DarcSkies777 wrote: »:tu @ the Killap and Born posts. Makes sense. But one has to wonder why the hell they allowed them to spend like crazy in the first place and just printed money instead.
The person that wrote the article made a good point:You see, the Federal Reserve is a parasite. They make money for their owners by sucking money out of the U.S. government and out of U.S. taxpayers. So, just like any parasite, they must strike a delicate balance. They have to keep feeding off the host without killing off the host completely. If the host dies it could end up killing the parasite. So the Federal Reserve actually needs to try to keep the U.S. economy alive so that it can slowly keep draining it. -
Swiffness! wrote: »illuminati
Jay-Z ......... -
Maybe they should have done that years ago.
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Yeah I peeped that. I need to learn more about that cuz I really dont know much just basics.bornnraisedoffCMR wrote: »The person that wrote the article made a good point:
Make a "Schools Darc on the FED and Why It's Evil" thread. The People Demand it. -
We aren't ? . Europe is ? . By attaching their all of their fortunes together and with Greece imploding, its pulling down the value of the euro and their purchasing power (and subsequently state worth) is in danger of going through the toilet.
Our problem is that with such high debt, the value of the dollar at risk when traded against other currencies. This is a long term-risk and nothing serious in the immediate future. But there is a reasonable argument that a weak dollar increases manufacturing in this country because importing products cost more than producing products in the US. -
We aren't ? . Europe is ? . By attaching their all of their fortunes together and with Greece imploding, its pulling down the value of the euro and their purchasing power (and subsequently state worth) is in danger of going through the toilet.
Our problem is that with such high debt, the value of the dollar at risk when traded against other currencies. This is a long term-risk and nothing serious in the immediate future. But there is a reasonable argument that a weak dollar increases manufacturing in this country because importing products cost more than producing products in the US.
Yeah, I've heard this argument before, the only problem is we dont have a manufacturing base in this country anymore, we a little something, but nothing close to what we used to have. All the money this country has squandered away all we've done was take a gamble that we can survive on being the consumer of the rest of the world's production. And its simply not sustainable. We need a balanced economy of service and manufacturing, not just service. I do believe the dollar needs to be devalued some, but not to the point of where it will be worth nothing and that's where we would be headed if the Fed decided to monetize. We've destroyed our ports and built river front properties that are now foreclosed on, we've regulated and taxed entire industries away from this country, so even when the dollar gets weaker, there wont be much manufacturing in this country to take advantage of it. We've put ourselves in a hole and its just going to be tough no matter what we do.
"We used to build ? in this country, now we just put our hands in each others pockets" - Frank Sabotka from "The Wire" -
bornnraisedoffCMR wrote: »This will force Congress to drastically cut spending, balance the budget, and trimm the fat on the govt, and start paying back the trillions of dollars we oh.
HAHAHAHAHAHAHAHAHAHA. And all will be right with the world!
Yea, here's da reality:
1) Every breathing "Tea Party" Republican is still towing the Weekly Standard ? about fixing the debt while boosting the Pentagon budget 900% percent and doing Octillion dollar tax cuts.
2) Democrats and entitlement spending yada yada u kno da ? deal nicca.
So until at LEAST 1 of those 2 things change, the U.S is fizzucked. -
bornnraisedoffCMR wrote: »We've destroyed our ports and built river front properties that are now foreclosed on
Yeah that was ? stupid, wasn't it. I saw alot of that. And its always "luxury" ? isn't it? Some ? real estate millionaire buys a wrecked 19th century warehouse where homeless crackheads ? , renovates it, and turns it into "luxury lofts" that rent for $6,000 a month. Wash, rinse, repeat. -
Swiffness! wrote: »HAHAHAHAHAHAHAHAHAHA. And all will be right with the world!
Yea, here's da reality:
1) Every breathing "Tea Party" Republican is still towing the Weekly Standard ? about fixing the debt while boosting the Pentagon budget 900% percent and doing Octillion dollar tax cuts.
2) Democrats and entitlement spending yada yada u kno da ? deal nicca.
So until at LEAST 1 of those 2 things change, the U.S is fizzucked.
Nah bruh. It goes beyond politics. They will have no choice. -
Swiffness! wrote: »Yeah that was ? stupid, wasn't it. I saw alot of that. And its always "luxury" ? isn't it? Some ? real estate millionaire buys a wrecked 19th century warehouse where homeless crackheads ? , renovates it, and turns it into "luxury lofts" that rent for $6,000 a month. Wash, rinse, repeat.
And the ? mayor provides that ? real estate millionare with tax credits, bonds, grants, and all kinds of ? . Then takes create for "Revitalizing our great cities riverfront and expanding our tax base!" gtfoh
They trying to do that ? here in N.O. So you going to destroy one of the few productive jobs left in the city and build ? nobody can even afford to live in? Good thinking Mr. Government. -
Originally published 05:00 a.m., February 25, 2010, updated 04:00 p.m., February 25, 2010
Bernanke delivers blunt warning on U.S. debt
Patrice Hill
With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States 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 United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.
"It's 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 Senate panel.
RELATED STORY: Fed to look at high-risk contracts on Greek debt
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 accommodate deficits by printing money and buying Treasury bonds — effectively financing the deficit on behalf of Congress and spurring inflation in the process.
Some economists at the International Monetary Fund and elsewhere have advocated this approach, suggesting running moderate inflation rates of 4 percent to 6 percent as a partial solution to the U.S. debt problem. But the move runs the risk of damaging the dollar's reputation and spawning much higher inflation that would be debilitating to the U.S. economy and living standards.
Rep. Brad Sherman, California Democrat, asked Mr. Bernanke directly whether the Fed would consider such a strategy, especially since IMF officials endorsed it.
"We're not going to monetize 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 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 United States government is going to bring itself back to a sustainable position."
Separately, Mr. Bernanke'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 increase 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 United States will lose its gold-plated AAA credit rating any time soon. Moody's Investors Service recently said that the U.S. rating would come "under pressure" at some point if Congress does not rein in the budget deficit.
The Fed chairman said repeatedly that he understands 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, we'll actually have more flexibility in the short term if we want to take other kinds of actions."
Separately, 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 of Alabama, 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 Timothy F. Geithner, who also testified on Capitol Hill on Wednesday, 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 U.S. 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's very important … that we make it clear to investors around the world that we will make sure that we will take the actions necessary" to keep the two entities stable, he told the House Budget Committee.
http://www.washingtontimes.com/news/2010/feb/25/bernanke-delivers-warning-on-us-debt//print/
