Poor Obama. He just can’t win. Our President grudgingly agreed to extend the Bush tax breaks to individuals making over $200,000 ($250,000 for couples). After vowing to soak the rich, he ended up peeing on the Left.
His one claim to victory was an extension of unemployment benefits. Only the most heartless among us could fail to feel for those people who are without work now through no fault of their own. I do not begrudge anyone who has paid into the system his/her benefits. I do, however, wonder how long anyone thinks this can last.
Governments of all stripes are notorious for whizzing in the wind as a response to most any crisis. Let’s look at what is really going on and who is standing downwind.
Bernanke has let us know that he is willing to turn on the money faucet even more if the $600 billion in Treasury purchases doesn’t do the trick. The idea is that this will lower interest rates and chase investors into stocks. At least, that’s what I make of his argument. Forgive me if I am skeptical, as in the same interview, Bernanke states that he is “100% certain” that the Fed can avoid excessive inflation by stopping the money stream at exactly the right time. Really?
Inflation is essentially a tax, one that impacts the middle-class and the poor disproportionately. Giving people money to spend and then taking it away while distracting them does not strike me as quite honest. Yet this is what Bernanke is essentially doing. Like a medicine show man, he hopes the audience doesn’t figure out what is really in the elixir until he is long gone.
Personally, I think Bernanke is not so much peeing rainbows as he is wetting his pants right now. I don’t think he has a clue what will fix the economy. The only strategy I have seen so far is printing money or buying government bonds, which is like printing money without “really” printing money. (Sorry, you’ll have to ask Ben for clarification on that one–I am still confused on the difference.) Add to that bailing out companies and lending to foreign governments and one begins to wonder whether he suffers from rank hypocrisy or terminal hubris.
The solutions being proposed work, if by “work” we mean they are like a cheap raincoat that keeps us dry for a short time. When the real flood comes, we will all wish we had bought a better one.