The Fed Weighs Who Should Win in November

In an above-the-fold article called “Fed Moving Closer to Action” in Thursday’s Wall Street Journal, the authors state, with a blandness fitting the topic:

Democrats have urged the central bank to take steps to bolster growth, pointing to high unemployment, but Republicans have urged caution, pointing to the risk of inflation and a weaker dollar.[1]

Does anybody believe that these are really the motivations behind the two political parties’ exhortations for Fed action (or inaction)? It seems obvious to me that it is all about the election in November. The Democrats want the Fed to do something that will make the economy look good in the short term because that will help President Obama win, and the Republicans want the Fed to stand still so that the economy continues to be just as it is--which is to say, lousy--thus working against Mr. Obama in November. It's as simple as that.

Of course, any action the Federal Reserve takes (short of dissolving itself, abolishing fiat currency, and apologizing for a century of grand theft unprecedented in the civilized world) is harmful to the economy in the long run. But the central bank can artificially prop up certain benchmarks that can be measured to make it appear that the economy is doing well. The Fed can, in effect, clip little pieces off of all the coins in our pockets without our noticing it, then generously distribute the loot to a population in ways calculated to make us feel (temporarily) just a little bit wealthier. 

And it can do this just in time for the election.

I realize that this observation--that the Board of Governors of the Federal Reserve has significant control over elections--is stating the obvious, but it is worth pointing out from time to time. For one thing, it highlights the perils of voting according to short-term, personal concerns (such as whether you are currently employed, or in debt, or feel well-off) instead of to long-term, fully integrated principles. Also, for those interested in the “inside baseball” of practical politics (I am not one), the Fed will reveal by their actions in the coming weeks who they want to win the election.

NOTES

[1] Jon Hilsenrath and Kristina Peterson, “Fed Moving Closer to Action,” The Wall Street Journal, August 23, 2012, p. A4.

Bernanke's Assurances

I didn’t watch the program, but apparently Ben Bernanke appeared on 60 Minutes last night to assure the world that he knows what he is doing. He claimed “’100%’ confidence that he could prevent runaway inflation.”

And how will he do that?

“’We’ve been very, very clear that we will not allow inflation to rise above 2% or less,’ he said. ‘We could raise interest rates in 15 minutes if we have to. So, there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time.’”[1, emphasis mine.]

First of all, I don’t believe for an instant the Fed will stop printing money under any circumstances. But even if we take Bernanke at his word, I am astonished at how brazen and “very, very clear” he is about his use of force and whim to destroy any semblance of a free economy. How can any businessman develop a new product, expand manufacturing facilities, and plan for the future, when the monetary czar actually boasts of his power to impose dictatorial fiat to change the playing field “in fifteen minutes”?

Rational individuals in a free country pursue long-term goals, with the coming years and decades in focus. The economic "stimulus" engineered by Obama, Geithner, and Bernanke discourages anyone from thinking into the future more than a quarter of an hour. And these are the guys who claim to be driving economic recovery! How can anyone miss the inconsistency?

Either Ben Bernanke is insane for thinking this message is actually an assurance . . . or he is crafty enough to know that a perpetually gullible American public will swallow the message whole.

NOTES

1. “Inflation Risk Is Low, Fed Says,” The Wall Street Journal, 6 Dec 2010, http://online.wsj.com/article/SB10001424052748704493004576001792213292076.html.

Democrat Drubbing

In the aftermath of last night’s evisceration of the Democrats, the biggest whopper I’ve seen so far comes from Tim Kaine, the Democratic National Committee chairman. Here is his explanation for the utter repudiation of the Obama agenda:

“Voters sent a message that change has not happened fast enough.”[1]

What? Change has not happened fast enough? That is what Kaine thinks the drubbing of his party means? Assuming the man is not joking, and giving him the benefit of the doubt that he is not simply a conniving liar trying to rally his pack of true-believers, I am left to conclude that he must be as innocent of facts, logic, and judgment as a new-born babe.

I hasten to add that I am not saying Kaine is stupid, of course. (Accusing public figures of stupidity is the refuge of the Left, which, being so bankrupt of ideas itself, resorts to ad hominem attacks as its primary form of argument.) On the contrary, I believe Tim Kaine is probably a pretty smart guy, and he certainly deserves to be in the company of other very smart people who are equally delusional--like, for instance, Paul Krugman, who thinks the recent expansion of government spending is a myth[2]; Ben Bernanke, who believes that government spending actually stimulates an economy; Harry Reid, who thinks paying income taxes in America is voluntary; and Nancy Pelosi, who thinks people who show up at Tea Party events are sponsored by large corporations.

To think that Democrats lost last night because they were not far enough to the left during the past two years is preposterous. Does Kaine think voters chose Tea Party candidates because they were angry at Democrats for being too “hands off”? Were Democrats kicked out of office because their President seized only General Motors instead of taking over the whole automobile industry like Hugo Chavez would have? Were supporters of Obamacare dumped because there was not enough bureaucracy, regulation, and redistribution of wealth built into the two-thousand-plus pages of the “health care” legislation? It’s completely absurd.

Barack Obama has, more than any politician in my memory, clarified the meaning of the so-called “liberal” agenda.[3] We owe the very existence of the Tea Party to that clarity; there is no way that such a spontaneous movement would have emerged if John McCain had won the election. Ordinary Americans talking about freedom versus socialism, reading Atlas Shrugged, and calling for sweeping cuts in government spending would not be nearly as widespread if there were a Republican in office, even though I think McCain is just about as horrendous a collectivist as Obama is.

The repudiation of the Democratic agenda is encouraging to me in the same limited manner as the Scott Brown election was earlier this year. I expect nothing good from the Republicans themselves--apart from some gridlock that will help retard the march toward statism, a march that has been accelerating alarmingly in the Bush-Obama era. However, I am pleased about the American spirit that the Democratic defeat signals. Evidently, there are still Americans not willing to let the government run their lives.

Hopefully, this will give us time to convince those Americans that they are right to live their own lives and seek their own happiness.

NOTES

1. “G.O.P. Captures House, Not Senate,” New York Times, 3 Nov 2010, http://www.nytimes.com/2010/11/03/us/politics/03elect.html?_r=1&hp=&pagewanted=all.

2. Paul Krugman, “Hey, Small Spender,” New York Times, 10 Oct 2010, http://www.nytimes.com/2010/10/11/opinion/11krugman.html?_r=1&ref=paulkrugman.

3. See John David Lewis, “Obama’s Atomic Bomb: The Ideological Clarity of the Democratic Agenda,” The Objective Standard, Vol. 4, No. 3, http://www.theobjectivestandard.com/issues/2009-fall/obamas-atomic-bomb.asp.

UPDATES

I added the Reid and Pelosi examples to the fourth paragraph.