Bernanke: U.S. default would cause 'major crisis'
July 13th, 2011
11:57 AM ET
10 years ago

Bernanke: U.S. default would cause 'major crisis'

NEW YORK (CNNMoney) - How much clearer can Ben Bernanke be?

Since February, the Federal Reserve Chairman has issued a stern warning to Congress: if it fails to raise the U.S. debt ceiling by Aug. 2, the economic fallout could be "catastrophic," "self defeating" and "dire."

And yet, here we are in mid-July, with the country only three weeks away from a possible default, and Bernanke is repeating his warning yet again - this time in his semi-annual monetary policy report to Congress.


Filed under: Ben Bernanke • Congress • Debt • Deficit
soundoff (16 Responses)
  1. Rudy NYC

    I believe the Chairman is being modest when he says *major* crisis. I think it would be something on the order of multiple disasters coming back to back, like an earthquake followed by a tsunami.

    July 13, 2011 12:03 pm at 12:03 pm |
  2. bb

    Losing our credit rating IS a major big deal with a debt as big as ours. I don't see how this would not push us into a deeper recession, along with other countries around the world. It wouldn't be JUST a lost decade any more. People, get your congress members motivated to close this deal NOW!

    July 13, 2011 12:07 pm at 12:07 pm |
  3. Palin Power

    We need President Sarah Palin for only she has the ability to completely fix this whole mess. President Palin will have Bernanke ousted and the Federal Reserve shut down.

    July 13, 2011 12:12 pm at 12:12 pm |
  4. david

    when bush took office we had a projected surplus and bush and greedy Republicans couldn't wait to get their greedy hands on our money and the Republicans helped them!!! thieves!! Taxing the rich was what put the money there in the first place...thieves!!!

    July 13, 2011 12:17 pm at 12:17 pm |
  5. Lynda/Minnesota

    You're preaching to the choir here, Mr. Bernanke. Meanwhile, China has just posted a 9.5% GPD. Glad to see our American jobs sent overseas have benefited one country at least. Perhaps Mr. Huntsmann will address this issue in his next presidential campaign speech, he being the biggest and most vocal endorser to date of all things made in China - his love for China being such as it is and all.

    July 13, 2011 12:22 pm at 12:22 pm |
  6. Four and The Door

    "It's possible that simply defaulting on our obligations to our citizens might be enough to create a downgrade in credit ratings and higher interest rates for us, which would be counterproductive, of course, since it makes the deficit worse," he said.
    This is absolutely not worth holding the debt ceiling raise for to try and get a tax increase. Obama's own Chief Economic Advisor Larry Sumner agreed in December that tax increases would only hurt prospects of improving the unemployment numbers.

    President Obama, back off the demand for a tax increase and agree with the Republicans to raise the debt ceiling. It will be better for the country. However, if Democratic Party politics are are more important to you then by all means hold out for higher taxes. There are plenty of people I see who will support letting the nation suffer for that decision.

    July 13, 2011 12:26 pm at 12:26 pm |
  7. vic , nashville ,tn

    Republicans goal is Obama must fail they don’t care about the nation

    July 13, 2011 12:43 pm at 12:43 pm |
  8. "major crisis"....?

    Check-made...raising the ceiling for more this "Leadership"..?

    July 13, 2011 12:53 pm at 12:53 pm |
  9. S. In California - Obama 2012

    Mr. Bernanke republicans don't care. They are nothing more than "political perverts" who care nothing about this country other than the money they can make. Hating our president is a personal choice but this has gone beyond hate – its now reached the level of insanity. They would rather see this country collaspe than to bargain with our president. Should we default on Aug. 2, – I say let's storm the capital and throw them ALL OUT.

    July 13, 2011 12:54 pm at 12:54 pm |
  10. ConservaFASCISTS/Domestic Terrorists/Taliban/Al Queda/TRAITORS

    Thank you Ben for this news conference. It seems that nothing can get accomplished by Congress unless scare the living crap out of them.

    July 13, 2011 01:14 pm at 1:14 pm |
  11. A Kickin` Donkey

    Not less than 2 months ago, Donald Trump was all the rage in Republican presidential circles. Although they`ve DUMPED TRUMP, it seems the GOP member in Congress and on the campaign trail are graduates from is Trump University`s school of Negotiation & Finance.

    Pound the table, beat your chest, and thru extortion, demand "your way or the highway".

    Finally, when it comes time to pay your financial obligations – DEFAULT – and leave others holding the bag.

    July 13, 2011 01:18 pm at 1:18 pm |
  12. California Conservative

    Obama fear mongers SS when ian't SS not part of the debt?

    Obama fear mongers SS when ian't SS not part of the debt?

    Obama fear mongers SS when ian't SS not part of the debt?

    July 13, 2011 01:26 pm at 1:26 pm |
  13. Billy

    But the tea party says everything will be fine... oh right, they are uninformed morons.

    July 13, 2011 01:26 pm at 1:26 pm |
  14. Mikey

    I simply cannot even understand many of the positions taken by the GOP, especially their inconsistant and illogical positions regarding taxes, deficit reduction, and the debt ceiling.

    There was a time when I agreed with the GOP on some things and disagreed with them on others. However, the current bunch of extremists, zealots, and crackpots now seem to comprise a significant portion, if not the majority, of the Republican Party. I can only speculate on the factors that have driven the right to or perhaps past the point of sanity, but here are a few possible reasons:

    Fear of the changing global economy (driven by improvements in technology, communications, and logistics)
    Fear of the changing demographics in the U.S. (partly due to policy, partly just the way it is)
    Fear of economic uncertainty (the shrinking middle class – global economy plus Conservative political and economic policy)
    Fear of global instability (the post 9/11 era)
    Fear of changes due to civil rights advances (minorities, women, gays, etc.)
    Fear of changes due to education (more reliance on science, less on religion)
    Fear of the changes represented by the election of President Obama (a liberal, mixed race man from a distant state with a non-white majority- represents the changing power structure in the U.S. -no longer completely dominated by old white men)

    Do you think greater access to psychological counseling would shrink the Tea Party?

    July 13, 2011 01:27 pm at 1:27 pm |
  15. John, PA

    BS.... we take in $10.00 for every $1.00 the government would have to service. We are being "Weinered" by Bernanke, Obama and all of the Democrats in Congress.

    "Weinered" = represents exactly what Obama and the Democrats in Congress are – LIARS. The Democrats will stand there and lie thru their teeth to achieve their agenda, no matter what it costs or affects.

    July 13, 2011 01:48 pm at 1:48 pm |
  16. Rick McDaniel

    Why not ask Obama to donate his campaign fund.

    July 13, 2011 02:32 pm at 2:32 pm |