Federal Reserve chairman Ben Bernanke testified about our flourishing American economy to Congress again today, and the economy's just not good at all! He signaled more rate cuts would come to stave off the growing credit crisis, but balanced it with fears of inflation. As the Federal Reserve noted in its semi-annual policy report today, it foresees "a negative combination of below-trend growth and inflation rates topping 2% this year, though conditions are expected to start improving in 2009." So we'll have horrible stagflation for all of 2008, but Ben Bernanke will make 2009 wondrous!

The Fed has already cut rates 2.25 percentage points since September, and Bernanke's constant harping about "downside risks" (read: horribly flawed American economy) indicates there'll be more in the future. Or maybe there won't be, since we don't want inflation either? What's it gonna be, Bernanke?:

Fed officials "will need to judge whether the policy actions taken thus far are having their intended effects," Mr. Bernanke said, adding the central bank "will act in a timely manner as needed" to keep the economy on track.... In his testimony, Mr. Bernanke offered no indication that the beleaguered housing sector is approaching a bottom. Housing should weigh on the economy "in coming quarters," Mr. Bernanke said.

Phew. No matter what happens in the next months, we'll know that the Fed will be there, making various decisions that have some effect on money somehow, and poor people will get poorer.

Bernanke Hints at More Rate Cuts Amid Multiple Economic Risks [WSJ]


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