Merkel for the Fed (a welcome rebuke for central bankers)

The Wall Street Journal ^ | June 4, 2009 | Editorial

[St. Louis Conservative]

To the Red Sox winning the World Series, we can now add another miracle for the ages: A politician demanding tighter money. We refer to German Chancellor Angela Merkel, who in a Berlin speech Tuesday rebuked the world's central bankers, notably including the U.S. Federal Reserve, for being too politically accommodating. Hallelujah, sister.

"The independence of the European Central Bank must be preserved and the things that other central banks are now doing must be retracted," Mrs. Merkel told a meeting sponsored by Germany's association of metal- and electrical-industry employers. "We must return together to an independent central-bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years' time." Referring to the U.S. central bank specifically, she said "I view with a great deal of skepticism the extent of the Fed's powers."

Usually when a politician lobbies a central bank, it's to demand easier money. We can't recall a similar tight-money intervention from a national leader, save perhaps Ronald Reagan's quiet support for Paul Volcker in the 1980s. Mrs. Merkel may have been channeling Ludwig Erhard, the great Chancellor whose hard-money policies helped to catapult the German economy from the ruins of World War II. Looking further back, she no doubt knows that the Weimer inflation of the 1920s paved the way for Hitler.

Whatever her inspiration, this is the second time Mrs. Merkel has volunteered to be the designated driver amid the G-20's fiscal and monetary binge. Three months ago, she led a revolt against President Obama's demand that Europe follow his Keynesian spending spree. Her spending restraint is already looking wise as the U.S. asks the world to finance a debt burden rising to World War II levels.

[Vince Ferrer]

Something that makes me say "hmmm":

Gold Panic inside Oval Office