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Ben Bernanke: Contractionary Fiscal Policy Is Contractionary: Don't Do It!

It seriously sounds as though Ben Bernanke is scared that the Congress will pass and Obama will sign a short-term cut in spending and increase in taxes that will send us back into a second dip:

Mark Felsenthal and Pedro Nicolaci da Costa write:

Bernanke: deep spending cuts could derail recovery: WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke warned Congress on Thursday that overzealous cuts to government spending could derail an already fragile recovery and said a U.S. debt default could wreak financial havoc.

I only ask ... as Congress looks at the timing and composition of its changes to the budget, that it does take into account that in the very near term the recovery is still rather fragile, and that sharp and excessive cuts in the very short term would be potentially damaging to that recovery...

On the second day of delivering the Fed's semiannual monetary policy report to Congress, Bernanke renewed his warning that a U.S. debt default would be devastating for the U.S. and global economies.

It would be a calamitous outcome.... It would create a very severe financial shock that would have effects not only on the U.S. economy but the global economy...

But Congress does not seem to be listening.

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