High praise has to be given to Angela Merkel, Germany’s chancellor, who suggested on Tuesday that "Unconventional monetary policies being pursued by the world’s main central banks could aggravate rather than ease the economic crisis."
Her surprisingly strong attack on the US Federal Reserve, the Bank of England and the European Central Bank was remarkable coming from a leader who had so far scrupulously adhered to her country’s tradition of never commenting on monetary policy. “What other central banks have been doing must be reversed. I am very sceptical about the extent of the Fed’s actions and the way the Bank of England has carved its own little line in Europe,” she told a conference in Berlin. “Even the European Central Bank has somewhat bowed to international pressure with its purchase of covered bonds.” She added: “We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in 10 years’ time.” (FT.com)It takes guts for a leader to come out and speak plainly and express concern, as Madam Merkel did.
On the other hand, Mr. Bernanke warned about fiscal deficits and said that large deficit-funded actions to fight the crisis were “necessary and appropriate”. But he said “near-term challenges must not be allowed to hinder timely consideration of the steps needed to address fiscal imbalances”.Warning of the risk of a future debt trap, he said: “We cannot allow ourselves to be in a situation where the debt continues to rise. That means more and more interest payments, which swell the deficit, which leads to an unsustainable situation.” This from the mastermind of the bailouts who printed money with abandon and ran a reckless monetary policy for years. After using the Fed funds to buy Treasury offerings, he has the gall to tell Congress to cut spending.
No wonder there is a lot more pain ahead.
Posts
No comments:
Post a Comment