Tuesday, October 20, 2009

Bernanke Warms to IMF-Style Shock Therapy For the U.S.

"Ben Bernanke said on Monday that it was "extraordinarily urgent" that the US and Asia adopt policies that prevent a revival of global economic imbalances as the financial crisis ebbs.

The Federal Reserve chairman warned that global imbalances -- the big gaps between national saving, consumption and investment rates reflected in large trade deficits and surpluses -- had helped cause the crisis and needed to be corrected." - CNN

Debasing the U.S. dollar is not primarily about increasing U.S. exports; much of these jobs are not coming back , as much because of technology as cheap overseas labor.

A larger reason for dollar debasement is to weaken the U.S. consumer and force a change in the trade balance by reducing consumption. The faction of the U.S. ruling class currently in power feels to much has been given away.

This is another reason why there is no significant jobs program in the offing, high unemployment will depress wages - helping a few domestic manufacturing industries, but also crippling consumption.

Bernanke also added"“The United States must increase its national saving rate,” he said. “The most effective way to accomplish this goal is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time.”-NYT

Again, crippling the U.S. consumer and debilitating the U.S. worker by cutting entitlements and public resources.

The general tone of Bernanke's speech was one of a genteel gangster.

1"Bernanke warns on imbalance risks with Asia" - CNN
2"Bernanke Calls for Action on Trade Gap" -WSJ
Bernanke cautions on risks from imbalances" - UK Times
Asia Said to Be Leading the Globe Out of Crisis"-NYT

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