For Americans confused by the arcane economics of money supply, a few things are obvious: Obama has renominated George W. Bush's choice to replace Alan Greenspan. You have to wonder, when Obama also chose to hold over Bush's Defense Secretary (Robert Gates), whether the fact of Obama's actions contradicts his constant Bush bashing.
What motive would Obama have in nominating a conservative inflation-fighting economist? After all, Obama's arguments in selling the so-called stimulus bill channeled John Keynes, not Milton Friedman. Obama's whole economic policy is an attempt to micromanage the economy in favor of things like green energy, and he is attempting to use fiscal policy to jump start the economy, just like FDR fruitlessly attempted to do during the Great Depression. Was "Helicopter Ben" an inflation-fighting profile of courage during the Democrats' mad spending spree earlier this? In fact, even though Bernanke claims to be a student of the Depression, his endorsement of the so-called stimulus bill shows no lessons learned from Keynesian economics during the 1930's.
Methinks that Bernanke doth protesteth short-term motives of his critics on both sides of the aisle too much. There is a grain of truth, of course; raising rates is never politically popular. But, in fact, Bernanke has been maintaining artificially low interest rates for extended periods of time, which is consistent with most progressives' objectives of loose, easy money, motivated by the Phillips curve, etc. There are multiple reasons I object to Bernanke's policies. First of all, I don't think maintaining artificially low interest rates fools the market; sooner or later, you eventually have to raise rates to deal with inflation (never popular), and (as Greenspan knows) one rate rise too many can result in an asset crash. Second, I don't think maintaining low interest rates and high corporate taxes helps grow the U.S. economy; it results in investment flight, exactly the kind of thing you want to avoid if you're trying to grow the economy. Let me point out--when you are dealing with near zero interest rates, you're pushing on a string.
I think Bernanke needs to explain why the Fed's record over the past decade warrant his reappointment and the Fed's continued or expanded responsibilities. Aren't the failures in financial service industry, over which the Fed has much regulatory authority, also a reflection of the Fed's deficient efforts making short-shrift of risk? Why, after a stock market crash, a housing bust, and corporate scandals, do we really believe that Bernanke and the Fed got its act together just in time to deftly handle last year's economic tsunami and aftermath? I believe that the Fed's current policy is penny-wise, pound-foolish, and Bernanke will face his own day of reckoning.
The only reason I'm holding off opposing Bernanke's renomination or stripping the Fed of some of its portfolio of responsibilities is because I'm concerned what Obama and his Congressional allies will do in response--e.g., appointing even more liberal economists or creating a new progressive-dominated regulatory agency. Let's just say I remain a skeptic, and I have no problem with the Congress holding the feet of Bernanke and the Fed to the fire. But I'm not clueless about Congressman Ron Paul's real objectives (Paul opposes the very concept of the Federal Reserve on Constitutional grounds) and his measure's co-sponsor, über-partisan pro-health care "reformer" Alan "My Congressman is Nuts" Grayson.
Obama's Job Summit: Too Little, Too Late
Speaker Nancy Pelosi never ceases to amaze me with her ability to do and say ever more more irresponsible things: her desire to use the TARP funds beyond their original intent, as sort of a slush fund for economically inefficient government job "creation". "Green jobs?" Give me a break! As if the government knows where to invest better than the private sector... More and more money to fiscally irresponsible states? No way... You want to create jobs? Get government out of the way of the private sector;stop competing (through massive spending) with small business for capital, reform Sarbanes-Oxley, quit threatening companies with cap-and-trade or heath care taxes and penalties and raising tax rates on job creators, cut employer payroll taxes, reduce government mandates and reporting requirements, make corporate tax rates more globally competitive, and negotiate free trade pacts, opening markets to American goods and services.
Political Cartoon
Cartoonist Gary Varvel explains how Barack Obama has finally achieved his goal of bringing a divided America together:
Christmas Musical Interlude: Newsong: "The Christmas Shoes"
I think this song is one of those that I remember what exactly I was doing when I first heard it--I was doing a DBA gig in the Los Angeles area and had stopped by a gas station to fill up the rental car's tank when the song came on the radio--and I just sat there, listening to the song. This is the touching song of a young boy desperately wanting to buy his dying mother a cherished Christmas present and the kindness of a stranger. (This is also one of the few songs for which I've myself written a sequel.) I also think the producers of this Youtube video did a superlative job retelling the story behind the song.
