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Bernanke: US Must Save More, Asia Spend More

Fed chief warns global imbalances could trigger new meltdown

By Rob Quinn, Newser Staff

Posted Oct 20, 2009 8:46 AM CDT

(Newser) – The world economy is headed back down the drain if Asians don't start spending more and Americans don't start saving more, Ben Bernanke said at a conference yesterday. The Fed chief warned that unequal trade patterns were partly to blame for the financial crisis and that they are re-emerging as Asia leads the global recovery, reports the Los Angeles Times.

Export-driven growth has helped Asia rebound, Bernanke said, but more needs to be done to keep imbalances in check. Bernanke said American policymakers needed to develop a "fiscal exit strategy" to start reducing the budget deficit, warning that doing so is "critically important to maintain confidence in our economy and confidence in our currency."

[Images (3)]

[Quotes (1)]

Reserve Board Chairman Ben Bernanke testifies on Capitol Hill in Washington before the House Financial Services Committee. (AP Photo/Evan Vucci, file)

Visitors walk in a hall showing large machinery at the 106th China Import and Export Fair in Guangzhou in south China's Guangdong province. (AP Photo)

A port worker walks past a cargo ship loaded with containers at the Tianjin Port, China. (AP Photo/Andy Wong)

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To achieve more balanced and durable economic growth and to reduce the risks of financial instability, we must avoid ever-increasing and unsustainable imbalances in trade and capital flows. - Federal Reserve Chairman Ben Bernanke

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COMMENTS

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Showing 3 of 7 comments

newsrmandan

Oct 20, 2009 9:14 AM CDT

What currency would the world trust as its reserve currency? The euro...too new too many countries involved to make it stable. They yen....not enough free enterprise without state intervention too communist. Russia's or India maybe the braziilian real? The problem with saving is that my saving is taking away the ability for someone else to make money. There is an element where the rich to super rich should be spending as much as they can right now instead of hording it for a sunnier day. For those with cash this is the sunny day, build that dream house buy that boat, remodel your house. The Government has the biggest house to remodel and the biggest horde of cash, why not upgrade our infristucture, Damns, water networks, utilities, power supplies, sun wind green-coal-and nuclear. No is the time for the US to get a deal on all these things that will eventually need to be done anyway. Do it now and employ millions of people at the same time. Financial Crisis solved!.

PosterNutbag

Oct 20, 2009 6:50 AM CDT

We need to make stuff. Bring the jobs home.

JoeQ

Oct 20, 2009 4:43 AM CDT

We're already saving much more. China is also spending much more. That all changed around October 2007. China has their own stimulus package and has been spending like crazy to the point where they have had to put on the brakes to avoid inflation and bubbles. Our trade deficit is looking much better too. The real problem we face is that without some government austerity we face losing the dollar as the world reserve currency. With that could come a collapse of the dollar and a real depression. Then we get to live through rebuilding our manufacturing base with no money to do it.

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Bernanke: US Must Save More, Asia Spend More