Back in the days before Greenspan was on the cover of TIME, one of the few great CB moves he made came through the pipes. In a radical move at the time, Greenspan injected himself into the fiscal debate in Congress. In mumbling and dire tones the Great One described the impending market melting crisis that the budget had set us on. Graham-Rudman was the Simpson/Bowles of its day and heralded as a "must do."
In reality, Greenspan was convinced that technology, quality and Chinese production were going to push down on US inflation rates. Greenspan was known to quiz students as to "What causes inflation?" Myriad answers were met with grumbling "No's." To him, excess government spending caused inflation. Certainly not the mistakes of the very institution he chaired. Thus evolved the quid pro quo that all denied. The man had given senior Congressional leaders assurances that if they moved on the budget, he would grease the economy with rate cuts.
Fast forward to today. Walking the knife's edge of a debt depression, Bernanke has elected to use the hallucinogen of negative real rates to prop up the system. His balance sheet and the budget have expanded as everyone else has been wound down. The crisis de jour is the silliness nick -named "The Fiscal Cliff." Just total up all the programs and tax breaks allegedly ending and subtract from already anemic GDP. Ooh scary, avert your eyes. Something called the Tea Party says this would be "good." If that's true then why all the trepidation? To this posts point: Why wouldn't Bernanke assure a deal like Greenspan's? If the Fed is doing something so heinous, why wouldn't Congress say, "Back off and we'll hold up the budget?" There's a glaring example of tightening credit AND harsh budgetary adjustment available..it used to be called Europe.
We don't rant from trading pits or intellectually brow beat from the Op-Ed pages of the few remaining dailies. We do know this, it isn't that difficult to navigate the choices. The citizens of the US have the Constitutional right to be horribly wrong about their priorities. Many of our problems are the result of that fact. We may be on the verge of doing it again.