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The calls the big question is after Ben Bernanke's testimony in front of congress yesterday after those fed minutes came out yesterday afternoon.
Wind -- the Federal Reserve start to take away the hedge.
Taper back on the bond buying program a five billion dollars every month.
Wind will we feel the pain the markets overseas certainly doing just that Japan falling more than 7%.
Is our day going to calmness and Martin -- is former chairman of the council become.
Hi this President Clinton what does he think about the communication or lack thereof from the veterans are and the pain that we will feel when the Fed to kind of again takes that juice away Martin what do you think it will it be painful is that unavoidable.
Yes to some extent it's it's.
Unavoidable it it it and there's a good bit of division within the open market committee within the board with.
Some of the members wanting that to continue.
The quantitative easing or expanded and others want to scale back and do it fairly quickly so there is there -- divisions.
I would guess that it's the fourth quarter of this year or maybe the first quarter of next year is when they're gonna start scaling back what tapering off.
The QE purchases.
But that is -- on how well the economy does and I think Bernanke made that it's pretty clear.
That's as far as he's concerned that they are going to taper off if and when.
You see more sustained economic growth at the moment we have growth but it's still pretty fragile.
It's certainly it.
What impact will it have to get excited you know it it probably will have the facts on on the markets it is already I mean the markets will react even before it happens just in anticipation.
That it happens.
But in terms of the economy.
I think the impact will be even more modest.
I don't think it's the main thing that's keeping the economy going at the moment.
Right now I think we have quite a bit intrinsic momentum in the economy or low dampened at the moment.
Buys them the effectiveness of questionnaire and the effect of the higher taxes.
I want to ask you this then if you're in the White House because you're -- -- the council of economic advisors how worried do you think.
That those people are that the administration is about what the Federal Reserve is doing again independent -- to -- no control over -- Well -- how worried this is -- They have been on a flat spot for the the White House obviously a whole business with the IRS and and so on has got them on the heels a little bit.
And they they are worried about the economy and and the role -- the Fed may play in in gradually scaling back the stimulus that's that's been provided.
But I I don't think they get there's nothing much really they can do about it's.
They may push again for some -- that something comes on the fiscal side or at least to avoid.
Further cut backs and and not spending more increases in taxes.
But -- -- -- it's just that they can't do very much about the Fed.
One last thing though because -- again because -- that tab because taxes went up at the end of the year tax revenue has been increasing.
There's a lot of talk.
They even from you Martin bit their deficits and the deficit spending is not -- is not as much of a worry that was even six months ago.
Well if you talk about the -- -- what's happening.
Right now what happened towards the end of last year what's happening this year and next year I think the deficit is coming down much more quickly than people expected.
So -- getting strong revenues.
In part because -- strong markets but also because the economy is finally sort of getting a little bit of momentum.
Government spending is definitely been held on -- control in fact much of it is actually declining.
The rate of growth of government spending his -- at one of the slowest rates ever.
So those things are bringing the deficit down that's going to take the edge off I think efforts to do more in the way of.
-- deficit reduction.
Which is sort of too bad right now I think it's okay not to do more but but the deficits gonna stop going up again if we know 234510.
That that's the challenge we have to deal with.
Martin great to -- certainly going to be a lot more payments Lamar when interest rates spike that's -- and we don't know -- -- -- -- me so much.
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