Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee on Thursday that not raising the debt ceiling would cause the deficit to rise and have calamitous effects on the economy.
In addition, Bernanke presented his Monetary Policy Report, according to CSPAN, and described steps the Federal Reserve might take in response to possible slower economic growth.
“As he did during yesterday’s House Financial Services hearing, he restated his opinion that spending cuts in a deficit reduction deal should be structured so that they do not hurt the economy in the short term,” the network reported.
Bernanke also offered a sharp warning during his testimony that a “huge financial calamity” would occur if a deal on the debt ceilling was not reached.
A number of pundits and investment managers criticized Bernanke after testimony before the House Financial Services on Wednesday. Bernanke floated the possibility of another round of stimulus in comments to House members and clashed with Rep. Ron Paul, R-Texas, over whether or not gold is to be considered money (Bernanke said it should not).