What Bernanke could say to shield the US from spill-over from Italy

This is what Bernanke could (or rather should) say about Italian events:

“Let me remind everybody that we have the instruments to shield the US economy from negative spill-over from political and financial events in Europe. We have said that we want to stabilize nominal spending in the US and if events in Europe jeopardize the fulfillment of our targets then we will increase money base growth to counteract these shocks. However, I do not expect that to be necessary as the markets should be well aware of our intentions to stabilize nominal spending and I therefore expect markets to adjust appropriately to do the job for us”

You can replace “stabilize nominal spending” with whatever nominal target you like.

End of story…

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3 Comments

  1. Benjamin Cole

     /  February 26, 2013

    I would like it even more if Italy left the EU and started up its own currency, and started printing away…along with Greece and Spain…..

    Reply
  1. What Bernanke could say to shield the US from spill-over from Italy | Fifth Estate
  2. It’s Frankfurt that should be your worry – not Rome | The Market Monetarist

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