Saturday, March 05, 2011

Stop Bernanke's Hanky-Panky

by Quin Hillyer - March, 4th, 2011 - The American Spectator

Literally halfway through writing this column, the latest email arrived from the always-wise economist David Gitlitz, blasting Bernanke: "The Fed chair didn't do any better attempting to explain the ongoing commodity price rally. The CRB spot commodity price index is now at record high levels and has risen by 85% since the Fed began its first quantitative easing program two years ago." And: "At some point, the reality that inflation can no longer be dismissed as a non-issue might become too obvious even for Bernanke to ignore. That realization, however, is not likely to come soon enough… to prevent the American economy from facing a bout of substantially higher inflation."

This article is an interesting take on the counter thought by some economists to "conventional thinking" by Bernanke's school of monetary policy. I agree that Bernanke is making a big mistake. I am simply not sure that raising rates artificially above "market dictated rates" will accomplish what even the author concedes violates the thinking of market "purists".

It certainly is a better option than continuing to pretend inflation is not breaking out in numerous places. With oil about to skyrocket, home prices about to fall again, food soaring, the collapse in the dollar pricing imports higher in an era when little is manufactured here in America, the overall picture for both the short and medium term is quite dismal. That is a key component in the refusal by those with money to invest in expanding our economy.

In addition to distrust in Bernanke, there is equally major distrust in Obama. He has already given our economy and free markets enough bad surprises. No one really trusts what will happen next, especially with so many in the left wing media predicting that Obama is going to have little trouble in defeating anyone the Republicans put up. Media influence is still a powerful force.

If it was your life savings that you had to invest, would you gamble on a future that might include Obama for six more years, or would you wait and see what happens in 2012?


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