Last week we presented a discussion of the feds ongoing plans to goose the American spending machine by printing and distributing currency. As we all know, there has been substantial deficit spending by both the previous and, at quite an accelerated rate, the current administration. This is simply promiscuous fiscal expansion policy (F E) that has no basis in sound, fundamental economic policy. There has been lengthy attribution of this approach to the British economist John Maynard Keynes. It should both be noted and recognized that England has now rejected such spending programs and is instituting significant spending reductions. We would encourage any interested reader of these essays to watch a recent “prime minister” question period. It is a remarkable display of good leadership dealing with past mistakes, deficit spending and a prior administration with leadership that is locked on failed policies of subsidies, protected classes, special interests and massive deficit spending. If you want a quick primer on the future of Obama’s PIP, dwindling in its obliviousness, watch the labor party representative during the question and answers period. Just click on: http://www.cspan.org/Watch/Media/2010/10/27/HP/A/39987/British+House+of+Commons+Prime+Ministers+Questions.aspx
Now to continue our review of America’s fiscal and monetary promiscuity and Mr. Bernanke’s policy of Quantitative Easing (Q E.)
Indiscriminate printing and distributing a national currency, much less the world’s reserve currency, is not only an act of desperation, it is unsound monetary policy and it is deserving of complete censure and rejection from any financially responsible citizen of the US and any debt holder of any US obligation. At an absolute minimum, the direct devaluation of a nation’s currency by its central bank should be censured by the citizens of that country and should lead to an immediate termination of all connected with such act. Further, in a representative democracy the elected officials representing the people should be called upon to take a position – aye or nay on such a proposal. And the elected president should be called upon to either accept or veto such a desperate act. Let the elected representative’s stand one way or the other for two reasons: one, it is their job and; two, they can either stand or fall at the next election based on the end results and end consequences of such a horrible policy.
America has chosen neither path. The central bank announces a massive monetary expansion program on top of a previous massive spending and monetary expansion program and not a peep out of congress and not a peep out of the president. The people spoke and devastated the party responsible for the spending. Just think about that simple consequence. The people, who will make the sacrifices and engage in a period of frugality, are begging for leadership that will enact such policies.
The Obama presidency is doomed unless the divided PIP in congress saves it. The Bernanke gamble of monetary promiscuity will only pay off, and briefly at that, for Wall Street, the banks and large corporations with pricing power. It will keep the wolf away from the public employee’s union door for a short period of time but these people only live for today. Apparently, Mr. Obama and what remains of his PIP have fully embraced this short term view. The rest of the world, that group that the immature candidate Obama rallied to his cause during his campaign against Bush and McCain, now judges Obama as a failure.
The publication Financial Times is not anywhere near as bashful in printing its observations about the Bernanke “quick and easy” boom plans. Here is their article: http://www.ft.com/cms/s/0/981ca8f4-e83e-11df-8995-00144feab49a.html#axzz14MQ2O700
And their editorial comments, on the same action, are must reading:
We repeat out previous observation about Bush II and Greenspan. They failed America greatly. Obama spared no adjectives in so describing Bush’ actions. And now the world looks at Obama with the same critical eye. Obama responds cluelessly. He has redefined the obliviousness of “not getting it.” Together with the singularly focused Bernanke, these four individuals are determined to enter the history books as the destroyers of America. They do not and did not understand what they did and are doing.
Instead of dealing with the fundamental economic burdens that have destroyed America’s competitiveness in world markets, they revert to easy programs of spending, borrowing and currency devaluation (F E and Q E.) The United States is getting its fat behind handed to itself everyday in the world’s competitive marketplace
The German Finance Minister opined as follows about Bernanke and Obama’s foolishness, “With all due respect, US policy is clueless,” Wolfgang Schäuble, told reporters. “It’s not that the Americans haven’t pumped enough liquidity into the market,” he said. “Now to say let’s pump more into the market is not going to solve their problems.” Herr Schäuble provided a direct perspective on these issues in an interview available at http://www.spiegel.de/international/world/0,1518,727801,00.html . It is worth reading.
In a recent editorial in the Washington Post (see: http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html ), Bernanke made the following statement: “The Federal Reserve cannot solve all the economy's problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators and the private sector.” Bernanke has got the players and the order of things quite wrong. The central bank, congress, the administration and the regulators caused and are now exacerbating the problem. The private sector must fix it. But, they need help. Unfortunately the help they need is the diminution of the other four Bernanke players in his order of things. Bernanke sees the four government players as a solution. Until they are seen as the real problem, the problem will continue. Herr Schäuble, the Financial Times, David Cameron and other world leaders understand the real problem. They see America as a "clueless" spoiled brat. When will Obama and Bernanke?