US Action News

No Congressman wants to be on the record voting for unlimited debt, yet most are willing to rail against fiscal recklessness while raising the ceiling every time it’s reached. Any Congressman who gives lip service to a balanced budget Amendment but votes to raise the debt ceiling is a hypocrite.

The global addiction to debt is going to have some very, very serious consequences. Instead of moving into a great time of peace and prosperity, everything is about to come falling apart.

Unfortunately the housing market will remain in government control for years to come and another real estate crisis will inevitably occur.

Congress created the Federal Reserve System in 1913 to promote stable money and banking, and to lessen the disruptive ups and downs of the business cycle. The Fed has failed dismally.

What this tells me is that our economic policy-makers in Washington don’t give a damn about savers. The Federal Reserve is holding short-term interest rates to near zero in a monetary policy that could be reduced to a headline like one that became famous back in the 1970s: FED TO SAVERS: DROP DEAD.

Inflation’s persistently high level has already prompted Andrew Sentance, one of the nine people who decide the cost of borrowing at the Bank, to start voting for higher interest rates. The minutes of the Bank’s latest meeting are due tomorrow and traders will be keen to see if anyone has joined Mr Sentance.

The Federal Reserve is undertaking a “dangerous gamble” by keeping rates at near zero for so long, and must start raising rates or risk damaging the nascent U.S. recovery, a top Federal Reserve official said on Friday.

“A growing level of federal debt would also increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget, and the government would thereby lose its ability to borrow at affordable rates. It is possible that interest rates would rise gradually as investors’ confidence declined, giving legislators advance warning of the worsening situation and sufficient time to make policy choices that could avert a crisis. But as other countries’ experiences show, it is also possible that investors would lose confidence abruptly and interest rates on government debt would rise sharply.” CBO

“I don’t like American politics and what’s happening,” Greenspan said.

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.