Bernanke Warns Deficits Threaten Financial Stability

[H.E. Pennypacker]

http://www.bloomberg.com/apps/news?p...efer=worldwide

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 remarks to the House Budget Committee that deficit concerns are already influencing the prices of long-term Treasuries.

Yields on 10-year notes have climbed about 1 percentage point since the Fed announced plans in March to buy $300 billion of long-term government bonds. The notes yielded 3.54 percent at 5 p.m. in New York, down from 3.61 percent late yesterday, as Bernanke’s warnings on the need to reduce the deficit supported the market.

Financial sustainability? What's that?

[ChamberedRound]

Well if that's not doublespeak I don't know what is. How can he say with a straight face that our deficits are threatening financial stability, when the lion's share of those deficits are due to the trillions of dollars the Fed begged the government to create in the form of the stimulus bills? I mean, the guy's right, but it's due to problem that that Fed in part responsible for.

[H.E. Pennypacker]

Well if that's not doublespeak I don't know what is. How can he say with a straight face that our deficits are threatening financial stability, when the lion's share of those deficits are due to the trillions of dollars the Fed begged the government to create in the form of the stimulus bills? I mean, the guy's right, but it's due to problem that that Fed in part responsible for.

Eh, I don't know. It's different spending $700 billion on things you think are necessary (improving credit markets) than it is spending a proposed $X trillion on entirely superfluous expenditures such as universal health care and all the other things our good government thinks it ought to provide us.

But I do agree with your premise. Almost as bad as Obama, of all people, saying how we can't continue to spend so much money.

[addicted2freedom]

Well if that's not doublespeak I don't know what is. How can he say with a straight face that our deficits are threatening financial stability, when the lion's share of those deficits are due to the trillions of dollars the Fed begged the government to create in the form of the stimulus bills? I mean, the guy's right, but it's due to problem that that Fed in part responsible for.

Congress is responsible for it. The Fed enables it.

Congress = crack whore, Fed = crack dealer.

[Chuck1981]

Congress is responsible for it. The Fed enables it.

Congress = crack whore, Fed = crack dealer.

I love this.....Mind if I borrow it? Hope not.

[addicted2freedom]

I love this.....Mind if I borrow it? Hope not.

Hehe. Thanks. Go for it!