Can the Federal Reserve Help Prevent a Second Recession?

thenation.com — If Congress fails to defuse the threat of the post-election “fiscal cliff,” austerity will be in the saddle for sure. The International Monetary Fund, not usually known for dire forecasts, predicts increased risk of worldwide stagnation, and has warned specifically against the “excessive fiscal consolidation” of austerity measures. Why haven’t the presidential candidates talked about this? Maybe for the same reason they didn’t talk about global warming: they saw no votes in either. Federal Reserve chair Ben Bernanke, almost alone among influential officials, has been sounding the alarm in his understated, scholarly manner. The former Princeton economics professor is an authority on the Great Depression, and especially on the danger of cutting back government stimulus prematurely before a vigorous recovery is established. Bernanke has vowed that he will not repeat the big mistake the New Dealers made in the 1930s.

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