Bernanke to Congress: Help me out!

I think Bernanke gets it.

From the Associated Press:

Federal Reserve Chairman Ben Bernanke has a message for Congress: Do more to stimulate hiring and growth -- or risk delaying the economy's return to full health.

Bernanke held out the prospect Friday that the Fed may take further steps later to help the economy. But he offered no new plans for now.

At a time when Congress has focused on shrinking budget deficits, Bernanke agreed that doing so is important for the long term. But he warned lawmakers not to "disregard the fragility of the current economic recovery."

"He appears to be saying that the Fed has largely played its part and that the politicians need to step up their game," said Paul Dales, senior U.S. economist at Capital Economics.

The economy is still hobbled by a depressed housing market, high oil prices and fears that the European debt crisis will deteriorate into a repeat of the 2008 financial crisis. The Dow has lost about 11 percent of its value since late July on fears that the economy might slip back into recession.

On Friday, Bernanke blamed this summer's political squabbling over raising the federal debt limit for undermining consumer and business confidence. And he warned that further gridlock in Washington would "pose ongoing risks to growth."

The Fed chief noted that the depressed housing sector has delayed a full recovery in the broader economy. He said the home market should gradually return to health -- a process he said the government should support.

He said that with oil and other commodity prices easing, he expects long-term inflation to remain low well into 2012.

Others have questioned whether any further lowering of long-term rates is needed. Investors seeking the safety of U.S. debt have forced down the yield on the 10-year Treasury note to 2.19 percent -- a full point lower than it was when the Fed completed its Treasury purchases about two months ago. Yet the economy is still sputtering.

Many economists note, however, that the economy's main problem is not that interest rates are too high. They say the main problem is that consumer spending remains too weak. So businesses feel little incentive to hire, expand and invest.

Until demand for goods and services steps up, the Fed has limited ability to strengthen the economy.

Joshua Shapiro, an economist at MFR Inc., said Bernanke was conceding that the Fed has "basically exhausted its tools."

And, the completely wrong way of thinking about this:

Rep. Jeb Hensarling, R-Texas, co-chair of a committee charged with proposing further deficit cuts, responded to Bernanke's hint that Congress should do more to stimulate growth by saying in a statement:

"The only way to put an end to this spending-driven debt crisis is for Washington to stop spending money we don't have. The committee was created to produce real deficit reduction, and accomplishing that task will help bring confidence back to job creators and grow the economy."

And that argument is coming from both political parties.

All gov't spending (not just spending that is over tax revenue) is 'money it doesn't have'. It's quite literally created out of nowhere. Remember taxes paid in are 'destroyed' not stored until spent by the government.

Reducing deficits won't bring confidence back to job creators, increasing sales will. Reducing deficits will instead decrease sales.

Oh, and don't mistake the title for a quote.