"Public officials should not be chosen if they are lacking in experience, training, proven virtue, and demonstrated wisdom. "
Sam Adams
Posted on 11/10/2010 11:18:32 AM PST by American Dream 246
In his press conference on Monday, President Obama responded to critics of the Federal Reserve’s decision to start a new round of quantitative easing – a fancy term for printing money out of thin air. He claimed this move would drive up U.S. growth rates. He also warned that “the worst thing that could happen to the world economy, not just ours but the entire world’s economy is if we end up being stuck with no growth or very limited growth.”
The latter is certainly true. It would be a global disaster if the U.S. economy remained permanently stuck in the mud. But the same cannot be said of his claim that the Fed’s experiment in pump priming would automatically lead to increased economic growth. By the time this experiment is over, QE will make us queasy.
Will driving the dollar down in this way do anything to boost U.S. exports? The short answer is not really. A weaker dollar will temporarily boost exports by making our goods cheaper to sell; but inevitably other countries will respond in kind, triggering the kind of currency wars economists are warning us about. It’s precisely to prevent this scenario that World Bank President Robert Zoellick recently came out in favor of some new type of gold standard or “international reference point.”
Will QE2 then at least boost domestic investment? No, again. As I explained in my speech in Phoenix, the reason banks aren’t lending and businesses aren’t investing isn’t because of insufficient access to credit. There’s plenty of money around, it’s just that no one’s willing to spend it. Big businesses especially have been hoarding cash. They’re not expanding or adding to their workforce because there’s just too much uncertainty created by a lot of big government experiments that aren’t working. It’s the President’s own policies that are creating this uncertainty.
The President is an educated man. I would hope that he knows these things as well as you and I do. So why then, if he knows it won’t really boost our exports or our domestic investments, would he still come out in defense of this dangerous experiment? I think the most plausible answer has to do with the debt. As liberal economist Paul Krugman has explained, a little inflation goes a long way towards driving down the value of the enormous national debt Obama has run up. And the higher the inflation, the greater the likelihood he won’t have to take any of the tough decisions needed to bring the deficit back down. In other words, pushing inflation upwards means you can have your cake and eat it too. You can spend all you like and then make the bill disappear by driving down the value of the dollar – buying with one hand the debt your reckless spending is issuing with the other. No need to cut spending, folks, just run the printing presses. It’s a win-win scenario.
Or maybe not. Because I fear there will be plenty of losers if this really happens, not least the millions of Americans who’ll see the value of their incomes and savings eroded. As the chair of the President’s own Debt Reduction Task Force, former CBO director Alice Rivlin explained, this sort of policy is no good. Sooner or later – probably sooner rather than later – it will come back to bite us in the behind. Rivlin warned: “As our debt mounts, the risk grows that our creditors, especially foreign creditors who own half our debt, will lose confidence in our ability to get our house in order and will demand dramatically higher interest rates.” Obviously, that’s even more likely to happen when they figure out that the Fed is deliberately driving down the value of the dollars they already hold. When they do lose confidence, Rivlin explained, that will spell disaster for our economy, “derailing the economic recovery and ballooning the cost of servicing the federal debt.”
If the President was serious about getting the economy moving again, he’d stop supporting the Fed’s dangerous experiments with our currency and focus instead on what actually works: reducing government spending and boosting business investment through good old fashioned supply side reforms (cutting taxes and reducing overly burdensome regulations). Simply running the printing presses in order to avoid paying off your debts is no way for a great nation to behave.
- Sarah Palin
[The President is an educated man. I would hope that he knows these things as well as you and I do. ]
Sarah’s my girl! She really knows how to take a rusty broken screwdriver and shiv it in your kidney with a smile!!
My advice is to buy wheelbarrows.
I Germany people were taking wheelbarrow load of money in to buy a loaf of bread.
You had better get in line now before the market is out of wheelbarrows.
By the way take what you have in savings and spend it now while it is stil worth the paper it is printed on.
What say Mitt, Huck, John ??
she said that with a tongue in cheek
She’s running!
I used to get static for regularly airing my mixed feelings about Palin, but this is exactly the kind of thing that won me over. She’s the only person on the right who puts herself out there and SAYS IT—she isn’t sitting around muttering “Well, you know, it isn’t really helpful to blah blah blah,” she just comes out and tells the world why Obama is wrong and we are right. She’s a leader. Whatever my remaining issues with her, I look at Romney and Huckabee and just want them to get out of my sight.
She is so far out in front of them it isn't funny!
Nail - Head - Hit.
"Public officials should not be chosen if they are lacking in experience, training, proven virtue, and demonstrated wisdom. "
Sam Adams
She’s running!
Yep. Positioning herself perfectly to be out there saying “I toldya so” when a grumbly electorate is facing skyrocketing prices for fuel and food in ‘12.
“I Germany people were taking wheelbarrow load of money in to buy a loaf of bread.”
The problem is someone may dump your money on the ground and steal your wheelbarrow. That’s what happened in Germany in 1923.
Sarah once again picks the most important issue and nails it.
I was wondering why Romney is still so high in the polls...we never hear anything from him. And then that hit me - it’s precisely because we don’t hear from him. When he will start talking I guess he will go down...hopefully. I mean how come he is so high in the polls since he is not taking any position about anything, while Sarah is on everything spot on - taking risks - every day? Please explain if you can.
Sarah is making more sense than anyone out there.
I was wondering why Romney is still so high in the polls... Please explain if you can.
Most people think Romney is
- that guy with the really nice voice
- he played Herman Munster on television
- he did something having to do with health care
- I think I have heard of him before
- And I don’t hear the MSM bashing him upside the head every day
Gee, maybe I’ll vote for him...
Palin knows more about monetary theory than 1/2 the economists on Wall Street, and 100% of the damn Democrats.
They're having cocktails with their other elitists friends and can't be bothered at the moment.
What's wrong with Red Flyer wagons?
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