Comment by the Fed Chairman
From a comment on Mike Norman’s blog. This helps to ensure a wide output gap. From Bernanke’s testimony from a couple of weeks ago: “Having a large and increasing level of government debt relative to national income runs the risk of serious economic consequences. Over the longer term, the current trajectory of federal debt threatens [...]

From a comment on Mike Norman’s blog.
This helps to ensure a wide output gap.

From Bernanke’s testimony from a couple of weeks ago:

“Having a large and increasing level of government debt relative to national income runs the risk of serious economic consequences. Over the longer term, the current trajectory of federal debt threatens to crowd out private capital formation and thus reduce productivity growth. To the extent that increasing debt is financed by borrowing from abroad, a growing share of our future income would be devoted to interest payments on foreign-held federal debt. High levels of debt also impair the ability of policymakers to respond effectively to future economic shocks and other adverse events.

Even the prospect of unsustainable deficits has costs, including an increased possibility of a sudden fiscal crisis. As we have seen in a number of countries recently, interest rates can soar quickly if investors lose confidence in the ability of a government to manage its fiscal policy. Although historical experience and economic theory do not indicate the exact threshold at which the perceived risks associated with the U.S. public debt would increase markedly, we can be sure that, without corrective action, our fiscal trajectory will move the nation ever closer to that point.”

Full prepared remarks

Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here
Copyright © 2010 by the El Paso Times and MediaNews Group and/or wire services and suppliers.
None of the content on this site may be republished or reused in any way without the written permission of the copyright holder.
Advertise with Us | Customer Service | e-Edition | Facebook | Mobile | My Yahoo | Newsletters | RSS | Site Map | Twitter | YouTube
News Partners:   Alamogordo Daily News | Carlsbad Current-Argus | Deming Headlight | Farmington Daily Times | Las Cruces Sun-News | Ruidoso News | Silver City Sun-News