Looming Fiscal Crisis

Federal Reserve Chairman Ben Bernanke has found some strong support for his fears of a looming fiscal crisis from an unlikely source: Bill Clinton’s Treasury Secretary Robert Rubin. Bernanke is a Republican and Bush administration appointee. Rubin said that the U.S. faces "excruciating decisions" regarding what he sees as an increasingly unsound economy.In his wide-ranging Jan. 22 interview with PBS’s Rose, Rubin asserted that this country is on the "wrong track on almost every front." "I think we’ve got to re-establish sound fiscal conditions . . . so we have an environment conducive to growth, and also to avoid the dangers that, as [Federal Reserve Chairman] Ben Bernanke said very recently in his congressional testimony, [underlie] unsound fiscal conditions. I think that’s a tremendous threat to the global economy. To our economy and the global economy,” Rubin added.

"I don’t really think there’s too many question about this — a strong dollar grounded in strong policy is very much in our country’s interest, because [of] the exchange rate. Remember — the exchange rate between the dollar and other currencies is basically a way of expressing the rate at which we take our goods and services and exchange them for the goods and services of other people of other countries. And the more . . . goods and services we can get for the ones that we give, the better off our standard of living will be. Therefore, a strong dollar is very much in our interest…. If the current account deficit doesn’t change, then at some point something is going to have to give. It seems to me that it’s very likely there’s going to have to be an adjustment of the dollar.” Rubin stated.

• JJ Commentary: The dollar is being purposely undermined by many of the nations who are opposed to American, including Russian, China, India and the Arab nations. Osama Bin Laden has stated his real goal is to bankrupt the U.S. When (not if) these nations decide to cash in their wealth of dollars, the value of the dollar (already extremely low) will crash and so will our economy. The somewhat vague statements of these leading economists are intended to serve as a warning without panicking world markets.