He says in July 2010: Federal Reserve Chairman Bernanke pushed back against the Republican Party line in testimony Wednesday, saying the economy still needs fiscal stimulus. See full story on Bernanke's testimony.
"I do believe that, at the current moment, that the large deficits, as unattractive as they are, are important for supporting economic activity," he said. "I would be reluctant to withdraw support too precipitously," given the fragile nature of the recovery.
In particular, state and local governments are cutting services and employment sharply, which is yet one more drag on the economy, he said.
What happened in early 2011, one quarter later? Oil prices peaked, implicit price deflator rising and real GDP posts a negative quarterly change. The stimulus had just ended and when he gave his recommendation oil was still $80. Does anybody believe that lack of government spending caused oil to shoot above $120, suddenly? Nor was it a weak dollar, which actually rose during the period. But the ten year yield was rising fast, mainly in reaction to Bernanke's QE. No, the reason we almost double dipped was the sudden spending surge from DC couple with Ben's QE tax on the bond industry.
Ben Bernanke is a nutty economist.
No comments:
Post a Comment