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FT.com / US / Economy & Fed - Fed chief downbeat on US economy
Ben Bernanke, the Federal Reserve chairman, has delivered a bleak prognosis for the US economy, suggesting that he supports a new monetary stimulus to battle high unemployment and head off the risk of a downward spiral in prices.

The increasing likelihood of hundreds of billions of dollars of further asset purchases by the Fed - a strategy known as quantitative easing - will heighten tensions in international currency markets by weakening the dollar further. That may prompt other central banks to follow suit with currency intervention or QE of their own.

Mr Bernanke on Friday also marched the Fed another step closer to adopting a formal inflation target - a politically contentious goal he has pursued since becoming chairman - saying that most of the body's officials think that price rises should be "2 per cent or a bit below".

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Fri Oct 15th, 2010 at 04:31:40 PM EST
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U.S. Posts Second-Largest Annual Budget Deficit on Record - Bloomberg
The U.S. government posted its second straight annual budget deficit in excess of $1 trillion as lingering unemployment constrained tax revenue. The shortfall totaled $1.294 trillion in the fiscal year ended Sept. 30, second only to the $1.416 trillion deficit in 2009, the Treasury Department said today in Washington.

A jobless rate projected to exceed 9 percent through 2011 points to the difficulty of narrowing the budget gap even as the global economic recovery boosts company profits and produces more corporate tax receipts. Growth in government spending may slow because of declining costs associated with the financial crisis that spawned such rescue plans as the Troubled Asset Relief Program.

"We still have a long way to go to repair the damage to the economy and address the long-term deficits caused by the crisis," Treasury Secretary Timothy F. Geithner said in a statement.

The Treasury Department finances the shortfall between taxes and spending with borrowing in financial markets. The national debt totals more than $13 trillion, exceeding the size of the economy, unadjusted for inflation. The government's fiscal year runs from Oct. 1 to Sept. 30.

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Fri Oct 15th, 2010 at 04:49:26 PM EST
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