- Fully understand desire to use debt limit deadline to force fiscal adjustment, but wrong tool for the job
- Even short suspension on principal or interest payments on treasury debt could cause severe disruptions in markets, payment system
- Failure to raise debt ceiling would push up interest rates, making deficit problem worse
- Exceptional increase in the deficit since late 2007 has mostly reflected deep recession
- As economy expands and stimulus policies are phased out, budget deficit should narrow over next few years
- Even after economy returns to normal, nation still faces sizeable “structural” budget gap
- US debt dynamics “clearly unsustainable,” status quo is not an option
- Rising govt debt relative to national income growds out private capital formation, dampens productivity
- Prospect of unsustainable deficits has costs, including increased possibility of sudden financial crisis
- Acting now to put in place credible plan for reducing future deficits could yield near-term benefits
I’ll sum it up for ya. Basically he’s saying “Washington, wake up and smell the 10 year old coffee you numbnuts”
EUR/USD effectively unchanged post Bernanke at 1.4475, yipeeeeeeeeee.