Yesterday we linked a New York Sun editorial which correctly indicated Governor Palin has been far ahead of the curve in predicting that the Fed’s policy of
masking monetizing Obama’s unprecedented debt accumulation with a policy of printing money via QE2 would inevitably result in the inflationary repercussions we’re experiencing now. Late yesterday Don Surber posted a great piece in which he ties a lot of this together, including a rather impotent attempt by New York Times lefty pundit Paul Krugman to rationalize the predictably bad effects of said policy. Excerpts follow:
There should be severe penalties and frankly, not only should we fire Ben Bernanke, but we should strip him of his pension and sue him for economic malpractice. There should also be a federal grand jury investigating this monumental failure.
American conservatives tried to tell them.
From the Wall Street Journal on November 9, 2010:
Sarah Palin, delving into a major policy issue a week after the mid-term elections, took aim Monday at the Federal Reserve and called on Fed chairman Ben Bernanke to “cease and desist” with a bond-buying program designed to boost the economy.
Speaking at a trade association conference in Phoenix, the potential 2012 presidential candidate and tea-party favorite said she’s “deeply concerned” about the central bank creating new money to buy government bonds. Ms. Palin said “it’s far from certain this will even work” and suggested the move would create an inflation problem.
What exactly did she say?
From the same story, Mrs. Palin: “When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it’s time for Chairman Bernanke to cease and desist. We don’t want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings.”
She referred of course to the hyperinflation in the Weimar Republic days of Germany in the 1920s — which collapsed and paved the way for Hitler and Nazi Germany.
This is what happens when a smart nation gets reckless.
From William Jacobson: “In other news, the most intelligent, nuanced and intellectually adroit President ever — someone who can parse a sentence with his bare hands — still is pushing windmills and high speed trains as the key to our economic future. I’ll take a mere commoner as the next president, you can have Don Quixote.”
And he teaches law at Cornell.
If an Ivy Leaguer can get it, why not liberals?
Because they have this type of wishful thinking from Nobel economics laureate Paul Krugman:
People have been asking me about this article on the disappointing results of the Fed’s quantitative easing. What I would say is that QE2 has been implemented in such a way that there was no reason to expect a lot of traction on the economy; the only channel through which we might have had large effects was via expectations. And that part mainly happened before the policy actually began.
What is the Fed actually doing? It isn’t “printing money”; it has been buying long term bonds, paying for them by adding to (interest-paying) bank reserves. In effect, it has been borrowing short and lending long.
He is in denial deeper than Elton John was when he married Renate Blauel.
Nothing wrong with being gay.
Plenty wrong with being stupid.
Surber has done an excellent job and I strongly recommend you read the whole thing. Be sure to follow Surber’s links as well.
(h/t Dave C)
Update: (h/t technopeasant) Ed Morrissey has more at Hot Air:
The actual problem in the economy is that government policies and high deficits portend massive tax increases in the near future, and regulatory adventurism promises higher operational costs. With the current administration sending those signals loudly and clearly, capital investors have no good reason to get off the sidelines and put their capital to work. The Fed has no control over that; they can only adjust monetary policy for a problem that monetary policy doesn’t impact significantly. Bernanke and the Fed attacked the one problem they could address — the risk of deflation — and kicked off inflation instead.
Many of us predicted exactly this outcome last fall when the Fed launched QE2, including Sarah Palin. We need to worry less about who’s running the Fed and more about who’s running the federal government. That’s where the problems can actually get solved.