Why the budget mess won’t matter

05 Feb

Sequestration was already kicked down the road once. Congress has not passed a budget in 4 years. We’re about to have a fight over the debt and raising the debt ceiling, again.

And so Congress and Obama don’t matter

From this perspective, the inability of governments — in Washington, along with Athens, Rome, Lisbon, London, Madrid, etc. — to come up with plans to stimulate their economies is not only an abdication of responsibility for putting in place fiscal policies that would address current economic woes but also a guarantee that central bank balance sheets will continue to expand.

If the one thing that the financial markets fear is the end of central bank stimulus, the political dysfunction in Washington makes that end less likely. If Washington is gridlocked and can’t even agree on a budget for the federal government, that just pushes more responsibility for the economy onto the Fed.

Sad and true.

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Posted by on February 5, 2013 in Economy


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