Likening Congress to a family arguing that it can improve its credit rating by deciding not to pay its credit card bill, Bernanke said that raising the legal borrowing limit was not the same as authorizing new government spending.
“It’s very, very important that Congress takes the necessary action to raise the debt ceiling to avoid a situation where our government doesn’t pay its bills,” he told an event sponsored by the University of Michigan.
The U.S. Treasury says the country bumped into its borrowing limit on Dec. 31, and it is now employing special measures to enable the government to meet its financial obligations.
U.S. leaders did agree at the beginning of January to extend tax cuts for all American families earning less than $450,000 a year to avoid a portion of a “fiscal cliff” of policies that Bernanke had warned would likely tip the economy into recession.
But lawmakers must still navigate the debt limit as well as thrash out a deal over drastic automatic spending cuts that were postponed until March 1.
“We’re not out of the woods because we are approaching a number of other fiscal critical watersheds coming up,” Bernanke warned on Monday.
The Fed last month opted to keep buying $85 billion worth of Treasury bonds and mortgage-backed securities a month until it saw a significant improvement in the labor market outlook, in an aggressive bid to push down borrowing costs and spur hiring.
It has held interest rates at nearly zero since December 2008 and has said it will keep them at this ultra-low level until unemployment reaches 6.5 percent, provided that inflation does not look likely to breach a threshold of 2.5 percent. U.S. unemployment in December remained at a lofty 7.8 percent.
The president of the San Francisco Federal Reserve Bank, John Williams, said earlier on Monday that he expected the central bank’s bond buying would be needed “well into the second half of 2013.”
Minutes from the Fed’s Dec. 11-12 policy meeting released earlier this month showed several policy makers favored ending the bond purchases well before the end of this year, while a few officials thought the purchases would be warranted until the end of 2013.
A third policy-maker who spoke on Monday, Dennis Lockhart, president of the Atlanta Federal Reserve Bank, stressed that the open-ended, or meeting-to-meeting nature, of the Fed’s commitment to buy assets did not mean the policy would continue indefinitely.
“‘Open ended’ does not mean ‘without bound.’ The program is not ‘QE Infinity,'” he told the Rotary Club of Atlanta. DM
Photo: U.S. Federal Reserve Chairman Ben Bernanke smiles during a news conference in Washington December 12, 2012. REUTERS/Kevin Lamarque
Watch Pauli van Wyk’s Cat Play The Piano Here!
No, not really. But now that we have your attention, we wanted to tell you a little bit about what happened at SARS.
Tom Moyane and his cronies bequeathed South Africa with a R48-billion tax shortfall, as of February 2018. It's the only thing that grew under Moyane's tenure... the year before, the hole had been R30.7-billion. And to fund those shortfalls, you know who has to cough up? You - the South African taxpayer.
It was the sterling work of a team of investigative journalists, Scorpio’s Pauli van Wyk and Marianne Thamm along with our great friends at amaBhungane, that caused the SARS capturers to be finally flushed out of the system. Moyane, Makwakwa… the lot of them... gone.
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So, if you feel so inclined, and would like a way to support the cause, please join our community of Maverick Insiders.... you could view it as the opposite of a sin tax. And if you are already Maverick Insider, tell your mother, call a friend, whisper to your loved one, shout at your boss, write to a stranger, announce it on your social network. The battle for the future of South Africa is on, and you can be part of it.
Don't believe Han Solo's evasion of Empire TIE Fighters. There are many miles of vacuum space between each asteroid in a field.