Economist Joseph Stiglitz thinks the United States and the United Kingdom should keep printing and spending money because there's no chance they will default and the world needs more stimuli.
“The likelihood of a default is so small, particularly in the US because all we do is print money to pay it back,” Stiglitz told an audience at the London School of Economics.
Stiglitz, a Nobel laureate and a former chief economist at the World Bank, said that the idea of a default by the U.S. or Britain is "so absurd, it’s another reflection of the absurdities in the financial markets.”
"What we need now is a second round of stimulus" to encourage more recovery, he said, the U.K. Telegraph reports.
Federal Reserve Governor Kevin Warsh says “the U.S. economy runs grave risks if we slouch toward a quasi-public utility model," The Wall Street Journal reports.
Speaking at a meeting of the New York Association for Business Economics, Warsh added that "The most valuable asset that the Federal Reserve had a generation or two ago and today is our credibility.”
"We have a $2.3 trillion balance sheet and people think the source of the power comes from the ability to grow your balance sheet, to run your printing press," Warsh said.
“But that's wrong, because the real power is consistent behavior and "our credibility to live up to our dual objective, both in respect to price stability and employment.”
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