Tribune – Comment, news and reviews from Britain's democratic left

The theory of cognitive dissonance proposes that people have a motivational drive to reduce dissonance. They do this by changing their attitudes, beliefs, and actions. Dissonance is also reduced by justifying, blaming and denying. US Treasury Secretary Timothy Geithner has come out in support of Chancellor George Osborne’s  £81 billion of spending cuts and says Britain’s light touch regulation – intended to attract bankers from New York (whom he oversaw when he ran the New York Fed) to the Square Mile – was partly to blame for the 2008 banking crisis and was “deeply costly strategy for financial regulation”.

Says Mr Geithner: “I am very impressed – just as one man’s view looking from a distance – at the basic strategy that (George Osborne) has adopted. What he did was a very remarkable thing. At a time when it was easier to make tough choices quickly, because they were not problems created by this Government, he locked his coalition and the Government into a set of reforms that were very good.” The US has a deficit of $1.6 trillion or 11 per cent of GDP.  Fed chairman Ben Bernanke says its policy of printing money (quantitative easing) to buy back Treasury securities – $600 billion in the last round known as QE2 – has nothing to do with forcing up food and commodity prices or inflation in BRIC countries. At last month’s Davos economic forum, Mr Geithner had said that for the US rapid, drastic spending cuts were “not the responsible way” to deal with budget deficits.