Daily Archives: February 28, 2011 @ 9:03 am (Monday)

US Budget Gap Is Top Worry for NABE Economists

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So much for their legacies:

US Budget Gap Is Top Worry for NABE Economists

February 28 (Reuters) — The massive U.S. budget deficit is the gravest threat facing the economy, topping high unemployment and the risk of inflation or deflation, according to a survey of forecasters released Monday.

The National Association for Business Economics said its 47-member panel of forecasters increased its estimate for the 2011 federal deficit to $1.4 trillion from $1.1 trillion in its previous survey in November.

“Panelists continue to characterize excessive federal indebtedness as their single greatest concern,” with state and local government debt the second-biggest worry, the survey said.

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central bankers comment on QE

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Recent statements regarding QE show at least some key Central Bankers have it right:

Don Kohn (Former FRB Vice Chair):”I know of no model that shows a transmission from bank reserves to inflation”.

Vitor Constancio (ECB Vice President): “The level of bank reserves hardly figures in banks lending decisions; the supply of credit outstanding is determined by banks’ perceptions of risk/reward trade-offs and demand for credit”.

Charlie Bean (Deputy Governor BOE): in response to a question about the famous Milton Friedman quote “Inflation is always and everywhere a monetary phenomenon”: “Inflation is not always and everywhere a monetary base phenomenon”:

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