Earlier this week, Federal Reserve boss Ben Bernanke again warned that out of control borrowing and spending will eventually destroy the country.
Said Ben to the the Budget Committee:
Sustained high rates of government borrowing would both drain funds away from private investment and increase our debt to foreigners, with adverse long-run effects on U.S. output, incomes, and standards of living. Moreover, diminishing investor confidence that deficits will be brought under control would ultimately lead to sharply rising interest rates on government debt and, potentially, to broader financial turmoil. In a vicious circle, high and rising interest rates would cause debt-service payments on the federal debt to grow even faster, resulting in further increases in the debt-to-GDP ratio and making fiscal adjustment all the more difficult.
But here is something Bernanke didn’t mention – a large chunk of that debt is owed to the Federal Reserve. In February, the corporate media fessed up to this undeniable fact. From CNBC: Read the rest of this entry »