Federal Reserve Chairman Ben Bernanke

Federal Reserve Chairman Ben Bernanke

"The loss of output and earnings associated with high unemployment ... reduces government revenues and increases spending on income-support programs, thereby leading to larger budget deficits and higher levels of public debt than would otherwise occur," Bernanke said. [...] As he has done repeatedly in the past couple of years, Bernanke again bemoaned the government's austerity obsession on Wednesday, including this year's payroll-tax increase and the brutal budget cuts of sequestration. Bernanke suggested that the government could replace some of this foolishness with longer-term fixes to Social Security and Medicare. A "Grand Bargain" on the deficit that does away with some short-term austerity might help the economy, Bernanke added.

Federal Reserve chair Ben Bernanke is over austerity and, in typical Fed speak, did his best to convince the members of the Joint Economic Committee of Congress that just maybe their efforts would be better focused on creating jobs than crafting for more deficit-cutting policies.So we can't be giving too much credit to Bernanke, throwing in that need to impose long-term "fixes" to Social Security and Medicare, a la the Grand Bargain just as long as it saves us from short-term austerity. But the core of the problem is austerity and that there's no way the Fed's target goals of 6.5 percent unemployment (we're well above) and 2 percent inflation (we're well below) can be met any time soon unless the government starts pumping some money into the economy again.