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Economy Title: Ryan confronts Bernanke over Fed’s purchases of U.S. debt, raises concerns about the dollar House Budget Committee Chairman Paul Ryan challenged Federal Reserve Chairman Ben Bernanke’s policy of so-called quantitative easing – the printing of new U.S. dollars to buy government debt – and raised concerns that a weakened dollar and inflation could cause the loss of the currency’s global reserve status. “There is nothing more insidious that a country can do to its citizens than debase its currency,” Ryan told Bernanke. “Chairman Bernanke: We know you know this. We know that you’re focused and concerned about this. The Fed’s exit strategy and future policy – it will determine how this ends.” Ryan said he believed a “course correction here in Washington is sorely needed.” “Endless borrowing is not a strategy,” he said. “My concern is that the costs of the Fed’s current monetary policy – the money creation and massive balance sheet expansion – will come to outweigh the perceived short-term benefits.” “It is hard to overstate the consequences of getting this wrong. The dollar is the world’s reserve currency and this has given us tremendous benefits in the global economy,” Ryan said. Bernanke, in his opening statement, defended the purchase over the last two years of almost $1.7 trillion in U.S. debt as having kept interest rates low and as having injected liquidity into the markets and the economy to sustain bank lending and consumer spending. “By easing conditions in credit and financial markets, these actions encourage spending by households and businesses,” Bernanke said. “A wide range of market indicators suggest that the Federal Reserve’s securities purchases have been effective at easing financial conditions, lending credence to the view that these actions are providing significant support to job creation and economic growth.” Bernanke said a Federal Reserve study found that the QE policy has created or saved as many as 3 million jobs. “It could be less, it could be more, but the important thing to understand is that it is not insignificant,” he said. He also said that the QE policy did not represent “a permanent increase in the money supply,” calling it a “temporary measure that will be reversed.” Nonetheless, Bernanke was sensitive to concerns about inflation, though he said that “overall inflation is still quite low and longer-term inflation expectations have remained stable.” “We remain unwaveringly committed to price stability, and we are confident that we have the tools to be able to smoothly and effectively exit from the current highly accommodative policy stance at the appropriate time,” Bernanke said. Rep. Chris Van Hollen, the ranking committee Democrat from Maryland, defended Bernanke’s approach. “I commend you and your colleagues at the Fed for using various forms of monetary policy to promote maximum employment and stable prices,” Van Hollen said. Van Hollen criticized a proposal by Ryan to strip the Fed of its focus on employment and limit it to price stability. “That would be going backwards, not forwards, on a jobs agenda,” Van Hollen said. The second round of QE – which is $600 billion compared to the first round total of $1.25 trillion – is currently half done, Bernanke said. Under questioning, he said that if the economic recovery was still stagnant in June when QE had run its course, “we would have to think about additional measures.” However, in New York, a senior Federal Reserve official on Tuesday raised red flags about continuing the program. “Barring some unexpected shock to the economy or financial system, I think we are pushing the envelope with the current round of Treasury purchases. I would be very wary of expanding our balance sheet further,” said Richard Fisher, president of the Federal Reserve Bank of Dallas.
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#1. To: Happy Quanzaa (#0)
(Edited)
then why is Ryan running away from his road-map? why can the GOP only find $30 billion to cut in a $3.5 trillion budget? Why did the GOP support tax cuts that will add hundreds of billion dollars to the deficit over the next 2 years? The GOP is as serious about cutting the deficit as Lindsey Lohan is about staying out of trouble.
Since January 3, 2011, Republicans have controlled the power of the purse.
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