By Karl Denninger
So said Bernanke this morning – more than once.
Oh really Ben?
“Achieving long-term fiscal sustainability will be difficult,” Bernanke said today. “But unless we as a nation make a strong commitment to fiscal responsibility, in the longer run, we will have neither financial stability nor healthy economic growth.”
Responding to a question, Bernanke said the recovery appears to have made an “important transition” from relying on government support and inventory rebuilding to private demand.
Note that the fiscal deficit spending never decreased after 2001 – and that it was simply “stepped up” to more than double the 2003-2007 level when this last crisis hit.
Bernanke says that the primary deficit needs to be reduced to ~2%. Ok, again, how? We never got there from 2002 onward, so what sort of “credible” plan do you think will be presented to do it now?
To get the deficit down to that figure we would have to increase tax collections (not rates) or cut spending in a combined $1.1 trillion.
It’ll never happen until the “someones” who are loaning us money shred Treasury’s credit card, and when that happens the result will be an instantaneous cut-off of the entitlement tit to which a full 30% of the government has become habituated.