Inasmuch as many Right Wing GOP members refuse to acknowledge the economic fact that in an economy where the private sector is unable or unwilling to hire or produce for a myriad of reasons, government spending is the only solution to maintain fairly stable economic activity while preventing a depression. Federal Reserve Chairman Ben Bernanke made this clear today in congressional hearings in no uncertain terms to the dismay of many GOP lawmakers. Bernanke just as Nixon eventually articulated is willing to defend Keynesian economic principles when economic collapse otherwise become inevitable. Moreover he specifically defended the stimulus as being effective.
My personal belief is that the stimulus should have been at least twice as large and we should have used this opportunity to rebuild our entire infrastructure. While many would view that as deficit spending it really would have been an investment in capital expenditures that have value and create additional value. President Obama was timid in his approach in order to avoid the vicious wrath of the Right. Unfortunately by doing this he forewent a V shaped recovery and we will be lucky to have a U shape recovery. Absent another stimulus we just may have a W, a double dip recession.
While we invest over a trillion in unpaid wars with a crumbling infrastructure, China, Brazil, and other new economic mastodons use our capital to supplement theirs to build monorails and modern infrastructures, The Right is effecting the demise of America.
While the conventional wisdom in Washington appears to focus largely on the need to lower the federal government’s budget deficit, rather than on reducing the nation’s nearly 10 percent unemployment rate, Federal Reserve Chairman Ben Bernanke sent a subtle message Wednesday to lawmakers: now’s not the time.
"Right now I don’t think is the time — this very moment is not the time — to radically reduce our spending or raise our taxes because the economy is still in recovery mode and needs that support," Bernanke testified before the House Budget Committee.
Bernanke referred to the nascent economic recovery as "still pretty fragile" and cautioned that the economy "may need more assistance."
Though the nation’s output is growing, jobs are still scarce; nearly eight million jobs have been lost as a result of the worst financial crisis since the Great Depression. Since January the private sector has created about 480,000 jobs, Labor Department data show. At that rate, the economy won’t return to its pre-recession employment level of about 115.6 million jobs until 2017.
The lack of jobs accompanying the ascent out of the "Great Recession" has led economists and commentators such as regional Federal Reserve Bank presidents to term this a "jobless recovery." Others, while not making that claim outright, worry that’s what the recovery will end up being unless current stimulative measures — such as the Fed’s policy of a near-zero main interest rate — continue.
The Fed is "doing its part," Bernanke said of the central bank’s "supportive monetary policy." The main interest rate stood at 0.20 percent in May, Fed data show.
The nation’s central banker added that government’s fiscal policy, like the nearly $800 billion stimulus bill passed last year, "is helping" and that it’s "needed."
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Congressional Republicans have focused on reducing the federal government’s budget deficit rather than on taxpayer-financed job creation efforts; Democrats have begun to follow.
Bernanke, however, pushed back against House Republicans’ claims that the stimulus, pushed by the Obama administration, didn’t bolster the economy. He said it "did increase growth" and "add to job creation."
But the economy’s slow recovery has been a "disappointment," Bernanke said. He added that there wouldn’t be a "V-shaped recovery," a term to describe a rapid economic expansion following a downturn.
Bernanke Warns Congress Not To Cut Spending, Cautions About ‘Fragile’ Recovery
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