FINANCIAL TIMES: …. Mr Bernanke said that recent data points to annualised growth of less than 2 per cent in the second quarter of 2012. “Households remain concerned about their employment and income prospects and their overall level of confidence remains relatively low,” he said….
The Fed chairman has ramped up his rhetoric on fiscal policy with each successive visit to Capitol Hill, but there is little sign that Congress is willing to compromise before the November election, even in order to boost growth….
“The most effective way that the Congress could help to support the economy right now would be to work to address the nation’s fiscal challenges in a way that takes into account both the need for long-run sustainability and the fragility of the recovery,” said Mr Bernanke. “Doing so earlier rather than later would help to reduce uncertainty and boost household and business confidence.”… (more)
EDITOR: Federal Reserve Chair Bernanke recognizes that the Fed has used up all the tools it has to improve the economy through monetary policy. It is up to Congress to pass a major stimulus bill to provide fiscal stimulus. Once people are back at work, the deficit can be pared down. It isn’t really the size of the national debt which is critical, but rather its ratio to the Gross Domestic Product. As the economy grows, the ratio will diminish below the danger zone.
