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Former Fed Gov. Mark Olson: Neither Budget Plan Is Ideal

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From the S&P downgrade, to the ever rising price of gasoline, to Federal Reserve Chairman Ben Bernanke's historic Q&A next week, economists have a lot to chew on these days. It's an economic dessert that could leave you with massive indigestion.

You've got layers of economic and geopolitical uncertainty, filled with political jabs, and the cherry on top is the 2012 Presidential election. Everyone and anyone between now and June will be saying that they are the leader Americans have been looking for when it comes to fixing the economic wrongs.

I'm reaching for the Rolaids already!

To get some perspective on all of this, I caught up with Mark Olson, former Federal Reserve Governor and Co-Chairman of Treliant Risk Advisors.

LL: Is the S&P 500 downgrade more about Congress' long-term inability to fix the nation's fiscal problems or the current debt ceiling debate?

MO: I think it is Congress’ inability to address long term issues. There is always a lot of noise surrounding the extension of the debt ceiling, but it usually gets handled prior to the crisis point.

LL: Which plan do you hope to see pass in terms of fixing our nation's fiscal ills: Ryan or Obama?

MO: In my judgment the Ryan plan has the better fundamental design, but neither is ideal.

LL: For the first time ever, Federal Reserve Chairman Ben Bernanke will hold a press conference after the FOMC decision. If you were in that room, what question would you ask him?

MO: The obvious question is potential extension of Quantitative easing (will there be a QE3). The next likely question is to explain how the Fed factors the increases in food and fuel costs into its analysis of inflationary pressure.

LL: Bernanke is good at honing his message in Q&A sessions. Do the markets need this type of guidance from the chairman right now? Timing is everything.

MO: I think he has made that point several times in Congressional testimony. It would be uncharacteristic of the Chairman to repeat it consistently outside of that testimony, but he has previously made the point that the absence of a clear fiscal policy plan creates uncertainty detrimental to market performance.

LL: So why do the Q&A? There has to be a motive behind it.

MO: I think it is the next logical step in an incremental process of increased transparency. Which is unrelated in my judgment, to what us happening on Capitol Hill

LL: There is a lot of chatter right now on "how to play" this FOMC meeting and press conference. What is your advice?

MO: Treat it as routine, and a component of the Fed’s expanded efforts in enhance transparency.

LL: Are you concerned about inflation?

MO: In my judgment, inflationary pressures are still soft, but increased food and commodity prices may impact inflationary expectations which could potentially accelerate the pace of inflationary pressure.

LL: The price of gasoline is fast approaching $4.00 on a national average. At what price will gas have an impact on the U.S. economy?

MO: Gas prices have the same economic impact as an excise tax – therefore any increase will have some impact. But as gas prices get above $4.00 across the nation we will clearly see some reduction in other areas of consumer spending.

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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."