Supporters of enacting a comprehensive deficit reduction plan got a boost yesterday from Federal Reserve Chairman Ben Bernanke. At a hearing with the House Budget Committee on the economic outlook, Bernanke responded to a question from Rep. Mike Simpson (R-ID) about the need for a large fiscal plan. He said the following (at the 58:45 mark of the video):

Yesterday, in the preliminary assessment of its 2011 balance sheet, the Federal Reserve reported that it would be sending $77 billion in 2011 profits back to the U.S. Treasury. While this is down slightly from the record high of $79 billion sent to Treasury in 2010, it is still a much larger return than in any other year in the 2000s, and more than double the average annual remittance of $36 billion over the 2000-2011 period ($28 billion average if 2010 and 2011 are excluded). 

The Federal Reserve's much anticipated statement came yesterday after two days of FOMC meetings, the Fed's policymaking group. As expected, they decided to take new steps to try to boost the recovery, citing weakness in the housing sector and labor market, as well as the downside risks related to some instabilities in global financial markets. (To see the steps they have previously taken, see Stimulus.org).

Who needs amusement parks when you can watch the volatility that is the stock market? Just a day after the Dow Jones posted its biggest one-day loss since the financial meltdown in 2008, the Dow bounced back with a 400+ point gain. In the middle of the day, there was the much-anticipated release of the FOMC's statement, which itself contributed to the up-and-down action.

Appearing before the House Financial Services Committee yesterday, Fed Chairman Ben Bernanke signaled that the Fed was keeping all options on the table should the economy need another round of monetary stimulus.

June has come to a close. With that also comes an end of the second round of quantitative easing, known as QE2.

We were lucky enough to have Federal Reserve Chairman Ben Bernanke open our annual conference this week. His remarks were an important statement on the need for action and also offered some helpful guidance on how to move forward. Full text of his remarks is here and video of the event can be viewed here.

Bernanke on our current situation:

U.S. Interest Rates:  What is "Normal"? Throughout the week, worried investors once again turned to U.S. Treasury instruments as safe haven investments. This time, investors reacted as fears mounted over the effects of Japan’s nuclear reactor crisis on the Japanese and global economies. Starting the week around 3.40 percent, the yield on the benchmark 10-year Treasury bond dipped below 3.20 percent on Wednesday (the 16th), the lowest point since December.

The President of the Atlanta branch of the Federal Reserve, Dennis Lockhart, made some important statements regarding our fiscal situation. While the Federal Reserve has no authority over our fiscal policy, the fact that more and more Fed officials are calling on our policymakers to deal with our fiscal house should be seen as a wake-up call that the time to delay is over.

Markets in the U.S. and elsewhere have focused on signs that the U.S. economy continues to recover, although still at a very gradual pace. January’s payroll employment data and updated benchmarking for 2010 indicate that job creation remains very sluggish, even adjusting for possible weather-related effects which may have held down jobs numbers.