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