Monday, August 29, 2011

Bernanke Joins Gridlock

Sign up Fed Chairman Ben Bernanke as a Gridlock follower. His speech in Jackson Hole was much watched by economic policy wonks. But the most significant things he said were about the dysfunction of our political system. “The country would be well served by a better process for making fiscal decisions,” he said, showing a keen grasp of the obvious after this summer's debt ceiling debacle. What improved process does he have in mind?: “Clear and transparent budget goals, together with budget mechanisms to establish the credibility of these goals.” My sense is that he doesn't think the "Super Committee" is going to come through. Bernanke claimed that the fundamentals for long term economic growth were still in place, but squarely pointed any blame for a possible return to recession. Growth should return, "if — and I stress if — our country takes the necessary steps to secure that outcome.”

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