US Fed Chairman Bernanke: Juice the economy 'quickly'
 

I don't get it, they want consumers to spend more? Isn't the average consumer in a world of bad credit card debt already, not to mention mortgaged twice, credit lines, loans?

The fed's answer is to just get the consumers to take on some... more debt?

Esplain lucy?


http://money.cnn.com/2008/01/17/news...ex.htm?cnn=yes

NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke told Congress Thursday that legislators should enact a fiscal stimulus package in order to help beleaguered consumers as recession fears grow.

The comments by Bernanke, who testified before the House Budget Committee, came as a cascade of more bad news about the housing, financial and manufacturing sectors stoked calls for decisive action.

"To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next twelve months or so," Bernanke said.

Some economists have suggested that the economy is heading into a recession or may already be in one. Stocks have plummeted this year, and big banks Citigroup (C, Fortune 500) and Merrill Lynch (MER, Fortune 500) reported huge quarterly losses this week resulting from bad mortgage investments.

Bernanke said that current losses from the subprime mortgage mess were probably about $100 billion but cautioned that this figure could wind up being higher.

Former Treasury Secretary Larry Summers told lawmakers on Tuesday that Congress should immediately consider a stimulus package of $50 billion to $75 billion through a combination of tax cuts and increased spending on unemployment benefits and other programs. He also advocated that another $50 billion to $75 billion be set aside in case economic conditions weaken further.

A spokesman for President Bush said Thursday that the White House also supports a short-term stimulus package.

Bernanke cautioned though that any stimulus "should be explicitly temporary" in order "to avoid unwanted stimulus beyond the near-term horizon and, importantly, to preclude an increase in the federal government's structural budget deficit."

The economy is based on consumer spending - no matter where the funds come from, whether it's cash or credit cards. As long as the cash registers are ringing, the economy is happy.

A tax credit on porn purchases would do a lot to "stimulate" the economy...

Hoooohoooo clever.

My economics professor used to say saving is unamerican.

let people write off credit card interest again

greenspan is to blame, not bernake. he only inherited the mess that greenspan help to create.

Volcker blames Fed for 'bubbles,' says it isn't in control
http://www.usatoday.com/money/econom...terstitialskip




Enlarge By Mario Tama, Getty Images

"It's no fun raising interest rates," Volcker tells the New York Times Magazine.

WASHINGTON (Reuters) ? Former Federal Reserve Chairman Paul Volcker thinks the U.S. central bank is to blame for allowing bubbles to inflate asset markets, and says that current Fed chief Ben Bernanke is in a tough spot.
"I think Bernanke is in a very difficult situation," Volcker told the New York Times Magazine for a story it will run Sunday. The Times made the text available to the media in advance of publication.

"Too many bubbles have been going on for too long ... The Fed is not really in control of the situation," the Times quoted Volcker as saying, seemingly clear criticism of both Bernanke and his predecessor Alan Greenspan.

Volcker chaired the Fed between 1979 until 1987, when he handed over the reins to Greenspan.

A slumping U.S. housing market following years of rampant price rises has sparked a global credit crunch and could tip the economy into a recession.

FIND MORE STORIES IN: United States | Fed | IPTC | Federal Reserve Chairman | Alan Greenspan | Ben Bernanke | Volcker | New York Times Magazine
Critics blame the ultra-low interest rate policies of the final Greenspan years ? when the U.S. central bank steered overnight federal funds rates to 1% and held them there for a prolonged period of time ? for fueling the housing bubble.

Bernanke, who was also a Fed board governor between 2002 and 2005, inherited the problem to an extent.

Greenspan has long been criticized for being very aggressive in cutting interest rates when growth was threatened, but slower to raise them when it picked up and the risks flipped toward higher inflation.

Volcker, a towering man known widely as 'Tall Paul', is credited with breaking the back of rampant 1970s inflation by aggressively tightening monetary policy, for which he was greatly criticized in some quarters at the time.

"It's no fun raising interest rates," Volcker said.