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Former Federal Reserve Governor Randall Kroszner on the economic consequences of the uncertainties of the fiscal cliff negotiations.
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Former Federal Reserve governor -- Rosner says that the uncertainty still the economy in the meantime.
How bad do you think this impact gets Randall the longer this drags on not as if we have a lot of time.
-- this just think about people who might want to invest.
Firms entrepreneurs.
When they see these kind of -- in Washington they just say no they they just don't have the confidence to be able to say.
I know what my taxes are gonna look like I know what sort of services I'm gonna get.
They just say I'm not sure that pullback and this really jeopardizes the job creation machine that has made America great.
You don't want to get about year old a lot of the Fed to date they seem to be the only adults of the table we can -- what they're doing.
But -- seem to be the ones there's.
Constantly.
Us.
Buying up all these mortgage backed securities and bonds and everything to keep interest rates low some argue artificially low and they're planning the next time bomb.
But that's needed here -- there for the point of argument.
It's the Fed did seems to be.
The only one doing something being semi constructive.
That it noted that the that that the politicians are imploding on one another.
I think I think you're exactly right -- I think Ben Bernanke and colleagues are.
-- take the longer term view what's necessary to get the economy going.
We need to have a revival in the -- the housing market so they've really been laser focus and tried to make sure that hasn't becomes more affordable.
By reducing interest rates and particularly interest rates and mortgages.
-- -- in most here's a country enforcement not get Chicago.
Seeing some revival of this market.
And it's a necessary condition but it's not sufficient if we have this incredible uncertainty about what tax rates are going to be you what.
Spending is going to be.
That's gonna hold the economy back no matter how much the Fed tries.
Do you worry that.
A recession.
Becomes more likely.
If this drags into the new year and not whether we ultimately cobbled together a deal but whatever we do might be a bad deal.
And that it looked -- sets in stone.
Something that could really rocked the economy.
Yeah hopefully they will try to avoid something like that but I agree if this is not a good deal -- as is the deal for deals sake but we still have very high taxes on corporations and capital and investment.
It's not going to get the economy moving and that's what we really need to do.
And so I hope that they can both get a deal and get one that since good deal that really can get -- it -- back on track for we should be.
You know Randall you've invited me and we talked over the years about how the market could have an impact.
I guess on the Fed thus certainly on on these.
Folks in congress and that it is a big sell off tomorrow with it echoes what we're seeing -- -- -- market right now.
That will compel them to get there on his back and do something or maybe not to what -- -- -- I think it does get that it sends a real warning signal to members of congress I remember back when I was the Federal Reserve.
And we have the the vote on the -- with a straight look legislation.
Which at first failed bank then that the -- in the S&P fell by a 78%.
Some members change their votes because they suddenly realize well maybe this is actually gonna provide support to main street.
And that might not be such a terrible thing and it turns out that I think you know at least as far as the taxpayers concerned.
Most of these have paid off are pretty well to the taxpayer.
You know you there is a benefit I -- topic for -- logic coming remain -- there is.
A benefit to a huge market selloff it provides cover -- -- politicians and it it doesn't mean I really wish we didn't have to go to the cliff and do these kinds of things because that's fragile I mean you don't want to take.
Those risks -- -- -- can't come back now we we came back from the depths of 2008 hopeful come back from any selloff that might come here.
But these are not risks -- people should be taking.
This is not just a political game.
These are people's savings these -- incentives for investment I mean this is want.
Can help to create jobs working -- destroy jobs much more than any particular government program very well put -- good seeing you again thank you.
Great to see --
