Fed’s Lockhart: U.S. Can’t Grow Out Of Debt Problems


deficit-stop-spendingBy Sophie Kinsella, Matzav.com

The Federal Reserve is going to take new measure to boost up the economy and scale down rate of unemployment. According to Fed, they are planning $600 billion bond purchase to bear the borrowing cost incurred by the government. The figure of debt amount in America is so astounding that debt consolidation services are a growing industry in the country. As of 2011, only public debt had surpassed trillion dollars. And budget deficit is supposed to touch 1.48 trillion dollars this time.

In this circumstance Fed’s announcement of purchasing bond to revamp the economy is significant though it has raised controversy among critics. Some are of the opinion that merely taking new monetary policy to redress the problem like job loss, economic insolvency cannot save the country and its people. Human resource has to be utilized in a proficient way to get productive result. Because today, ‘skill mismatch’ is a ‘structural factor’ that is increasing unemployment rate in America.

However, Lockhart, the president of Atlanta Federal Reserve Bank has opined that, “there is scope of reducing the unemployment by sensible monetary policy but that will leave a higher level of ‘natural unemployment’…than may be we enjoyed before the recession.” Though the rate of job loss In America dropped considerably from 9% to 9.8%, the rate of recruitment is very meager. As per the data put in the last month by Labor Department, only 36000 Americans were employed.

The country is limping with the burden of debt. In such scenario, we cannot conceive that the country will automatically get rid of the problem. Lockhart said that the growth of economy from 2.5% to 3% is not adequate enough to cope up with the mammoth debt amount. He gave emphasis on the need of long term economic policy to meet the problem of budget deficit. He said, “although we are in recovery at the moment and we are seeing growth, the economy is expanding, until we have dealt with the underlying fiscal issues we are not growing on absolutely sound foundation”.

Sophie Kinsella is a contributory guest columnist for various websites and communities including Oak View Law Group and CMFA. She has completed her Graduation in Finance and is currently working with an Investment company located in California. She has written some great articles on topics like bankruptcy, investment opportunities, debt settlement programs and more.

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