mr. malpass that he made reference to is a qe-2 and the fed's action. and there was something on high tax strategy from new hampshire. it said we continued to print money. the fed buying treasurys is printing money, is that fair to say? >> it risks that. maybe a rhetorical point or a mild point, technically the fed barrault's bit from banks. and it creates excess reserves at the fed. as long as we have a stoppage in the regulatory process where banks are not lending, then there has not been an actual expansion of the amount of money in the private sector. >> the leverage that the fed uses? >> all that has happened so far is that the fed is taking on the risk of the private sector by owning long-term debt. so they are exposed if interest rates go up. the taxpayer is exposed. on bynt lending going banks, from that point of view it has not expanded their the point is well taken that by the fed going down this line, people worry about the fed and worry about the dollar and about the u.s. >> mr. berner anke answered in a similar manner to you -- mr. bernanke

mr. malpass. again welcome. [inaudible comments] >> thank you mr. chairman and senator sessions, others on the committee it's great pleasure to be here and thank you for the invitation to testify. i think we have a full blown fiscal crisis. we've been kicking the can down the road. it's time now for action to hold the line on spending. i think we need a full upheaval in the culture of spending and deficits that is controlling our government processes. before turning to my testimony, i'd like to give a little background. my slides are available on encim aglobal.com which is dedicated to smaller governments so people watching can follow on. i'm going to go through some of the slides. and as in the side senator sessions mentioned paleosol core. -- paul volcker. i was in this room on the staff of the budget committee. i was here when paul volcker said enough is enough. we are at that point where people need to be saying we can't afford it, even though it might be a good program. if i may i'll go to the first slide. my testimony is broken into three -- i