Palin Warns Bernanke Not to Pal Around With Inflation
November 8, 2010
(ChattahBox Business News)—Famous economic expert Sarah Palin is demanding that Federal Reserve Chairman Ben Bernanke “cease and desist” from continuing with his new monetary policy of purchasing long-term debt, called “quantitative easing.” Why? Because the conspicuously unintelligent, half-term governor, Fox News contributor and reality TV star, believes Bernanke’s actions to maximize employment would plunge America into a “permanently higher inflation” that would raise the price of nacho chips and oil. And also, Germany doesn’t like the idea, so that settles it. Palin continues with her nonsensical fearmongering by channeling the words of Ronald Reagan, who once compared inflation to hit men and robbers. If none of this makes any sense to you, join the club.
Palin is attacking Bernanke’s recent decision to purchase an additional $600 billion of Treasuries to spur economic growth and boost employment. This is nothing new. Last year, the Fed purchased nearly two trillion dollars worth of U.S. Treasury Bonds to stimulate a stagnant economy. Why does the Fed do this? Because that’s their job.
The Fed has a legal mandate to execute monetary policy to “promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” With unemployment hovering near 10 percent, short-term interest rates near 0 and the inflation rate at slightly above 1 percent, so-called “quantitative easing” is not only statutorily required, but it’s essentially a no-brainer.
The real danger is not from inflation, but from timidity, in failing to make a bold enough move to have any real impact. Nobel prize winning economist Paul Krugman, writes in the New York Times, that Bernanke’s insistence on listening to know-nothing right-wing “domestic inflationistas” has watered down his “quantitative easing” to such an extent, that it’s unlikely to succeed.
“In an effort to mute that criticism, he’s scaling back his plans in such a way as to guarantee that they’ll fail,” writes Krugman.
Right on cue, one of Palin’s advisers scribbled out a screed against the horrors of inflation for Palin to read at a trade-association convention in Phoenix. Palin’s speech rails against printing money “out of thin air,” while warning against “playing around with inflation.”
“All this pump priming will come at a serious price. And I mean that literally: everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher. And it’s not just groceries. Oil recently hit a six month high, at more than $87 a barrel,” says Palin. [...]
“We shouldn’t be playing around with inflation. It’s not for nothing Reagan called it “as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” The Fed’s pump priming addiction has got our small businesses running scared, and our allies worried. The German finance minister called the Fed’s proposals “clueless.” 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.”
President Obama defended the Fed’s monetary policy, while at his economic trip to India.
“Anything that would stimulate the underlying growth and policies of entrepreneurship in the United States would help the cause of global prosperity,” Obama said.
Krugman dismantles the hypocritical whining of foreign governments, saying the “hypocrisy is so thick you could cut it with a knife.”
“After all, you have China, which is engaged in currency manipulation on a scale unprecedented in world history — and hurting the rest of the world by doing so — attacking America for trying to put its own house in order. You have Germany, whose economy is kept afloat by a huge trade surplus, criticizing America for running trade deficits — then lashing out at a policy that might, by weakening the dollar, actually do something to reduce those deficits.”
Palin is in good company then. She now advocates a position supported by Communist China.