July 22 (Reuters) - Former Federal Reserve board member Lawrence Lindsey said on Thursday it will be "obvious" by the end of this year that the U.S. economy has entered a "deflationary trap".
"We know from (Fed) Chairman (Ben) Bernanke's recent comments that it is now at least a concern ... By the end of this year I think it will be quite clear," Lindsey said in an economic forum in Tokyo.
"I would expect by December we will see further quantitative easing" by the Fed, he said.
http://www.reuters.com/article/idUSTOE66L05U20100722Bernanke Avoids Pledging Action Even as Outlook ’Uncertain’
July 22 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke signaled that signs of deeper economic weakness would be needed to justify additional monetary stimulus, even as he said an “unusually uncertain” outlook for growth. The Fed’s near-zero interest rates and record balance sheet are already “very stimulative,” Bernanke said yesterday in Senate testimony. He outlined possible options “if the recovery seems to be faltering,” including amplifying the commitment to low borrowing costs, while cautioning that officials haven’t fully reviewed the measures.
Bernanke’s comments, including a reiteration that the Fed is planning for an exit from its unprecedented stimulus, sent stocks tumbling from Wall Street to Tokyo. While Bernanke left the door open to additional steps, he said nothing would happen in the “near term.”
Former Fed Governor Lawrence Lindsey predicted that the U.S. central bank will take additional easing steps by the end of the year. “It would be obvious for the Federal Reserve by the end of this year that we are entering in a deflationary trap and I would expect some response by the Fed by that time,” Lindsey, who also served as a White House economic adviser in the Bush administration in 2001-2003 and now runs his own consulting company, said at a forum in Tokyo today.
http://www.businessweek.com/news/2010-07-22/bernanke-avoids-pledging-action-even-as-outlook-uncertain-.htmlIn this environment of deflation, underutilization, unemployment, the geniuses of the catfood commission are going to recommend cuts to social security & other "entitlements", congress is stingy with unemployment extensions & federal aid to states, etc. states are cutting, localities are cutting --
that should make things better -- for big capital.
"In a depression, money returns to its rightful owners"
andrew mellon
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