Fed chairman on debt: ‘Trillion there, a trillion here… doesn’t make much difference’

Caroline May
The Daily Caller

Trillions of dollars appear to be a pittance to Ben Bernanke, President Barack Obama’s Federal Reserve chairman.

At a Thursday Joint Economic Committee hearing, South Carolina Republican Sen. Jim DeMint pointed out that the Federal Reserve is keeping interest rates artificially low and, by extension, also keeping payments on U.S. debt low — allowing Congress to potentially over-borrow.

DeMint probed Bernanke on how increasing interest rates would affect U.S. debt payments.

According to Bernanke, if interest rates were raised by just one percent, the deficit would increase $100 billion annually. DeMint point out that would be $1 trillion over a decade.

“If we were to raise interest rates by a full percentage point, and ignoring the fact that most debt is of longer duration, it would not reprise, that would still only raise the annual deficit by something a little over $100 billion,” Bernanke said, noting that the amount is relatively small with an annual deficit of a $1 trillion.

“That’s real money,” DeMint responded.

“Trillion there, a trillion here,” Bernanke responded. “Yes, sir I agree with that. But what I’m saying is that the situation is — the deficits are so large, particularly going out over the next few years, irrespective of the level of interest rates, that I would think that Congress would have plenty of motivation to try to address that and that whether or not interest rates are currently 1.5 percent for ten years or 2.5 percent for ten years doesn’t make much difference.”

Watch the video at The Daily Caller

Related: From Congressman Paul Ryan‘s Facebook page:

The latest numbers show that if we do nothing to control our debt, your share will nearly triple in just 25 years. Share this graphic with your friends and let them know that this doesn’t have to be our future.

click on the image to enlarge

CAJ note: And this is just the federal debt. What will you owe to your state if its spending isn’t also reigned in?

Update: Mark Levin on banks being told to buy US debt: This is how our government destroys our country!

This is really, really not good. It’s like the mortgage crisis starting all over again, where banks were told by our government to make loans to people who couldn’t pay them back. Except this time banks are being told to buy government debt that the government may not be able to pay back. And that could lead to a debt bubble that will devastate America when it pops…

The article continues, with audio, at The Right Scoop.

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