Coming as it did on a busy day, Ben Bernanke’s speech in Minnesota this past Thursday was probably overlooked, but it was hugely important.Here you had the Chairman of the Federal Reserve barely touching on monetary policy (at a time when everyone is obsessed with the QE3 question) and instead talking mostly about fiscal policy, and the folly of premature retrenchment.
Then, perfectly, later that night, Barack Obama announced a brand new stimulus, which will be difficult to pass, though not totally impossible.
The bottom line is this: Whereas not long ago, it looked like all stimulus from now on would have to be from the monetary side, fiscal policy has come back from the dead, and is now back in the mix. Bernanke, whose efforts to goose the economy have been mixed (at best), has to be pleased.
And generally, this is a positive development for the economy. The bottom line is that when the private sector is as water-logged with debt as it is, making money cheaper to borrow does very little. Only the addition of new money (via more spending) has much hope of moving the needle.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.