While addressing a conference in California earlier today, US Federal Reserve Chairman Ben Bernanke called for the US government to reduce its dependency on deficit financing and work towards a balanced budget. Bernanke also called on countries with large surpluses such as China, to increase consumer spending in order to balance global trade and help alleviate the world-wide financial crisis.
“As the global economy recovers and trade volumes rebound, however, global imbalances my reassert themselves,” Bernanke warned. For the United States’ part, “the most effective way” to boost national savings in this country “is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time,” Bernanke said in prepared remarks. He didn’t suggest ways to do so.