we have a huge advantage potentially relative to other countries, countries in the reinhart and rogoff book. we have a credit line unsurpassed by anything any country has ever had. and we earned that credit line. however, we are in the process of wasting that credit line. we're not investing in productive assets. we're not upgrading our education system. we're not boosting growth in other ways you might prefer to boost it. we're just spending that, borrowing to finance consumption in excess of our income. and that will absolutely end badly. the pickle we're in could very well end up being a very large one and maybe bigger than what other countries have had. we have an opportunity to fix it, an opportunity that the europeans don't have right now. the europeans are in a different place from us and a much, much tougher place. and we should take that as a cautionary tale and use that to fix our own budget today. so i think we're all on the same page with regard to your general point, senator. >> you touched on my next point i wanted to ask, was about the reserve currency. i know that some

state debt and add in unfund edits and social security system, the matters you just mentioned, then rogoff thinks america's debt level is well over 120% of gdp. and the paper they wrote was indeed based on the most exhaustive study of financial crisis and nations ever performed, and that's why it's gotten a good bit of interest. so, thank you for sharing with us. i think you're correct to advise us we should move forward on all fronts sooner rather than later. can perhaps disagree about exactly when we ought to start some of the reduced reductions in spending, but personally i would believe that we shouldn't go a day with inefficient wasteful government spending. every bit of that should be eliminated sooner rather than later and a healthy, leap, -- lean, productive federal government would be good for the economy also. thank you, chairman bernanke, and thank you, mr. chairman, for your courtesy. and i hope i -- i hope the chairman feels better soon. >> beleaguered with an infection today. mr. chairman, i'd like to review a discussion we had in our earlier meeting because i think it's help

today sort of is i guess tries to convince you that it's not necessarily different this time, like rogoff the past, goes back to 1907 where we had a sharper snap-back than we've had this time, and implying that it's not, that we weren't destined to do this, that some government policies actually have impacted what's happened. where do you come down on this? >> well i think the country could grow much faster if we changed several policies, the most important of which is we need a tax code that incents investment. i don't know if you have it there but i sent a chart up that showed -- >> we'll look at that. shows the amount of money that a corporation puts into capital equipment and software and correlated with private employment, almost 1:1. >> correct. we're still, you know, 5% or so below the 2007 capital investment levels, and it's not a mystery as to why we've been unable to gloat faster. i think the other two elements that are very big in this regard and people forget it, last fall the price of a gallon of gasoline in the united states was about 35% higher than it was in 2010, and that

the way i read the rogoff reinhart study and i think what i hear you saying is that this isn't just that a debt crisis might happen -- and those can happen quickly, as they warn in their book, that crisis can happen when you're at this debt level, out of the blue for things you never expected and you're in serious financial trouble -plt -- trouble. like our 2006-2007 financial crisis, nobody predicted. they also indicate that huge debt can impact economic growth today. and they say when your debt reaches 90% of g.d.p., your debt is that much, it can slow growth by 1% to 2%. we're already at 100% of g.d.p. do you think it's possible that their study based on empirical data might be telling us that the debt right now, because it weakens confidence and drains investment capital, that our debt now could be slowing our economy? mr. thune: i think it's very clear. and i think if you look at, as you said debt is a percentage of g.d.p., now over 100%. think about that. this is the highest level of debt, highest level of spending as a percentage of our g.d.p. that we've seen since the end of worl