Friday, April 08, 2011

Good News: Dallas Fed Chief Says U.S. in 'Budgetary Death Spiral'

Earlier today, Dallas Federal Reserve Chief Richard W. Fisher had some blunt words for the Democrats in Washington. Put in terms even a liberal can understand: without dramatic budget cuts, this country is headed for a complete economic collapse.

Think Road Warrior without the amenities.

There cannot be robust direct investment in the United States without confidence in the nation’s ability to reverse its budgetary death spiral, especially the inexorable accumulation of national debt and unfunded liabilities of Medicare and Social Security. [Ed: Oh, you mean the programs Harry Reid, Chuck Schumer and the execrable Kris Van Hollen are trying to destroy?]

...The need to break the back of that spiral is as dire now as was the need for Paul Volcker to break the back of inflation in the 1980s. Those who are leading the charge to restore fiscal sanity, be they Republican or Democrat [Ed: Democrat? Sir, where is a Democrat arguing for 'fiscal sanity? Show me just one!] , will no doubt recall the personal vitriol hurled at the then-Fed chairman; they should steel themselves against it. They should remember that, as a result of his steadfast determination to press on with exorcising inflation, Mr. Volcker is today among the most respected living Americans and widely considered an exemplar for public servants worldwide.

The lying, scheming, demagoguing Democrats could care less about America's future. Their craven lust for power dominates any concern for America's economic future, for our troops, or for anything that can help strengthen America.

Too harsh, you say? I beg to differ. Consider the counsel from Obama's former top economic adviser: Christina Romer: A Weaker Dollar Is Good For America.

With unemployment still near 9% and the "real" unemployment rate at 15.7%, "we can't afford not to do more," Romer [says]. It's a "mistake" for the Fed to end QE2 in June as planned, Romer continues. "The evidence is it's been very effective. I don't understand why we'd be dialing back that tool."

Despite the recent rise in Treasury rates, QE has been effective at lowering long-term rates, she says, citing academic research such as a new report from the NY Fed entitled: Large-Scale Asset Purchases Were Effective at Lowering Borrowing Rates.

Lower rates encourage corporations to make investments and individuals to borrow, "which tends to encourage spending which puts people back to work," Romer says.

More controversially, Romer lauds QE for helping to weaken the dollar. A weaker dollar makes U.S. goods more competitive overseas, boosting exports and GDP growth, and ultimately hiring. While that's true, she seems to overlook the impact a weak dollar has on ordinary Americans in terms of falling buying power and punishment for savers and those living on fixed-incomes.

Gee, ya think?

Romer's counsel is the kind of sage advice that helps guide the destructive policies of the Left.

The charts above help us compare the costs of silver, gold, oil, gas and food, respectively, over the last two years or more.

Since Barack Obama took office, the policy of quantitative easing (or, as I like to call it, Xeroxing Currency) has helped the price of key commodities skyrocket. While our delightful bureaucrats in Washington insist that inflation "is under control", a quick drive to the gas station helps us refute that propaganda.

Americans' costs for energy and everything it helps produce and move -- most importantly, food -- is dramatically increasing. This hidden tax on seniors, "the poor" and "the middle class" is the direct result of Barack Obama's policies of record-setting deficit spending and restricting our access to energy.

And the pain has only just begun. Remember in 2012.


Mmatters said...

While this is a decent speech in many respects, Doug, it is also full of delusion about where we currently stand:

- "The economy responded and began a recovery in the middle of 2009 that is slowly gaining steam and now appears to be self-sustaining." Horse manure. Since the middle of 2009, the economy has added 128,000 private non-temp jobs and 508,000 temp jobs. Self-sustaining my a**. The stats just relayed are evidence that there is no long-term confidence among business owners and business planners. As you noted a couple years back, nobody can plan any further than about 4 weeks.

- He refuses to concede the possibility (actually, the likelihood) that no one is out there to buy our new debts in the amounts we have to issue them ($150 billion or more a month), which is why the Fed HAS to buy them and will continue to have to buy them, as long as we run these horrible deficits. We're ALREADY heading down the Weimar road.

- He's not willing to note that our problems have gotten exponentially more serious in the three years since his May 2008 speech because one political party began at right about that time to deliberately sabotage most of the remnants of our fiscal well-being.

So his warnings are fine, but his failure to apportion necessary blame on this administration's actions and the pervasive business uncertainty IT and IT ALONE has created is appalling.

errant pedant said...

Should be "couldn't care less". If I care a lot, then I could care less. If I don't care at all, then I couldn't care less (than zero).