Federal Reserve Chairman Ben Bernanke sounds a warning on growing deficit..

Federal Reserve Chairman Ben S. Bernanke warned Wednesday that Americans may have to accept higher taxes or changes in cherished entitlements such as Medicare and Social Security if the nation is to avoid staggering budget deficits that threaten to choke off economic growth.

"These choices are difficult, and it always seems easier to put them off -- until the day they cannot be put off anymore," Bernanke said in a speech. "But unless we as a nation demonstrate a strong commitment to fiscal responsibility, in the longer run we will have neither financial stability nor healthy economic growth."

His stern lecture came as the economy is emerging from the worst recession in years, sending the stock market up considerably over the past year and raising public hopes for a return to prosperity. But the economic downturn -- with tumbling tax revenue, aggressive stimulus spending and rising safety-net payments such as unemployment insurance -- has driven already large budget deficits to their highest level relative to the economy since the end of World War II. This has fueled public concern over how long the United States can sustain its fiscal policies.

The health-care bill signed by President Obama last month has further stoked the national debate over government entitlement programs, though the non-partisan Congressional Budget Office has projected that the legislation would actually reduce future deficits.

With his warning about what could be the next economic crisis, Bernanke offered a contrast to Alan Greenspan, his predecessor as Fed chairman. Greenspan did little to sound an alert about the housing and credit bubbles that brought on the financial crisis and was pilloried on Wednesday by a special congressional commission for the Fed's lapses during his tenure.

Bernanke did not endorse any particular approach to reducing the deficit. But he laid out the "difficult choices."

"To avoid large and ultimately unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above," he said.

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/07/AR2010040703116.html

Unless there is a contitutional amendment with a formula REQUIRING congress to limit spending, spending will continue to be out of control. Guess it will take a real DEPRESSION for people to wake up.

It just goes to show how twisted this government is..

Is ANYONE surprised that this 'government' wants to remove ALL means of financial independence from us and make us completely dependent on the 'government tit' ... ? This is NOT 'accidental'. It is PLANNED. We are in the process of returning to a 12th-Century FEUDAL society of Lords, Dukes, Barons, and SERFS. Guess who gets to play the part of the serfs ... ?

The US is technically bankrupt. The current spending programs are only possible by selling bonds to foreign nations. At some point in the near future, the amount being paid on interest could (probably will) cause social services to reduce causing mass unrest in the general population. (IMHO anyway) The instability will cause foreign nations to stop buying bonds if they don't stop anyway.

The US is also devaluing it's own currency by simply printing more of it without anything to back it up.

You don't keep lending money to someone who cannot control their spending. A major issue is that the countries loaning the US money are afraid that a collapse of the US would cause a world wide financial collapse.

China is rapidly using sales to the US to build it's own economy to the point in the near future that sales to itself may make sales to the US unnecessary for sustained growth. At this point, lending money to the US would probably stop and China would simply slide into the position of world economic leader somewhat as the US did after World War II.

I guess Bernanke would know, as he's one of the chief causes of the out of control debt.

You, sir, are correct. We are in a 'Weimar Republic' scenario, but haven't yet approached the period of hyperinflation that occurred at its end. Yet. The 'government' [sic] is still managing to PRINT enough worthless PAPER currency to keep the music playing a little longer. Our debt is primarily owned by China, as you point out. China, however, is already on record publicly as saying it will purchase NO new Treasury bills. If China decides to call the debt (cash in) the T-bills it already holds, we are screwed. When we monetize the debt the way we do now, there is NO value to back it up. Anyone who FUNDS our debt is going to insist on HUGE interest earnings to make it worth their while to fund us, but eventually the day comes when they decide that we'll never be able to repay what we owe, and they call the debt in. THAT's when the fan gets messy ...

WHAT?! The deficit out of control?!? Why was this never discussed before?



Bernanke must be some kind of jienyoos!

he needs cover when the interest rates start skyrocketing and we go into another recession/depression..

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If bernanke said this then i wouldn't believe a word he says . he works for obama and the low life is biteing the hand feeding him .

If we are printing a litttle extra which I don't beleave , we are all in trouble . That is what is called inflation .take in a dollar and send out 2 new ones . that means the bonds are no good if your holding any . The chinaise are a very smart people and wouldn't of bought those bonds with out a clause protecting them from someone doing just that .
I feel that both partys have caused this not just one . Its hard to find any one around thats not on the take . selling there votes passing worthless laws knowingly .
we need to take over one of the partys and change the whole thing ..get rid of these moron judges along with the others .