Sarah Palin: Obama?s Clever Way to Punt the Tough Calls: Driving the Dollar Down

Obama?s Clever Way to Punt the Tough Calls: Driving the Dollar Down

by Sarah Palin on Wednesday, November 10, 2010 at 1:15pm

In his press conference on Monday, President Obama responded to critics of the Federal Reserve?s decision to start a new round of quantitative easing ? a fancy term for printing money out of thin air. He claimed this move would drive up U.S. growth rates. He also warned that ?the worst thing that could happen to the world economy, not just ours but the entire world?s economy is if we end up being stuck with no growth or very limited growth.?

The latter is certainly true. It would be a global disaster if the U.S. economy remained permanently stuck in the mud. But the same cannot be said of his claim that the Fed?s experiment in pump priming would automatically lead to increased economic growth. By the time this experiment is over, QE will make us queasy.

Will driving the dollar down in this way do anything to boost U.S. exports? The short answer is not really. A weaker dollar will temporarily boost exports by making our goods cheaper to sell; but inevitably other countries will respond in kind, triggering the kind of currency wars economists are warning us about. It?s precisely to prevent this scenario that World Bank President Robert Zoellick recently came out in favor of some new type of gold standard or ?international reference point.?

Will QE2 then at least boost domestic investment? No, again. As I explained in my speech in Phoenix, the reason banks aren?t lending and businesses aren?t investing isn?t because of insufficient access to credit. There?s plenty of money around, it?s just that no one?s willing to spend it. Big businesses especially have been hoarding cash. They?re not expanding or adding to their workforce because there?s just too much uncertainty created by a lot of big government experiments that aren?t working. It?s the President?s own policies that are creating this uncertainty.

The President is an educated man. I would hope that he knows these things as well as you and I do. So why then, if he knows it won?t really boost our exports or our domestic investments, would he still come out in defense of this dangerous experiment? I think the most plausible answer has to do with the debt. As liberal economist Paul Krugman has explained, a little inflation goes a long way towards driving down the value of the enormous national debt Obama has run up. And the higher the inflation, the greater the likelihood he won?t have to take any of the tough decisions needed to bring the deficit back down. In other words, pushing inflation upwards means you can have your cake and eat it too. You can spend all you like and then make the bill disappear by driving down the value of the dollar ? buying with one hand the debt your reckless spending is issuing with the other. No need to cut spending, folks, just run the printing presses. It?s a win-win scenario.

Or maybe not. Because I fear there will be plenty of losers if this really happens, not least the millions of Americans who?ll see the value of their incomes and savings eroded. As the chair of the President?s own Debt Reduction Task Force, former CBO director Alice Rivlin explained, this sort of policy is no good. Sooner or later ? probably sooner rather than later ? it will come back to bite us in the behind. Rivlin warned: ?As our debt mounts, the risk grows that our creditors, especially foreign creditors who own half our debt, will lose confidence in our ability to get our house in order and will demand dramatically higher interest rates.? Obviously, that?s even more likely to happen when they figure out that the Fed is deliberately driving down the value of the dollars they already hold. When they do lose confidence, Rivlin explained, that will spell disaster for our economy, ?derailing the economic recovery and ballooning the cost of servicing the federal debt.?

If the President was serious about getting the economy moving again, he?d stop supporting the Fed?s dangerous experiments with our currency and focus instead on what actually works: reducing government spending and boosting business investment through good old fashioned supply side reforms (cutting taxes and reducing overly burdensome regulations). Simply running the printing presses in order to avoid paying off your debts is no way for a great nation to behave.

- Sarah Palin
Re: Sarah Palin: Obama?s Clever Way to Punt the Tough Calls: Driving the Dollar Down

'Refudiation' of $600 Billion Printed Out of Thin Air

While on a United Airlines flight from New York City to Los Angeles this week, a fellow passenger handed me a copy of the The Wall Street Journal Nov. 15 op-ed by Alan Blinder—"In Defense of Ben Bernanke"—and suggested that I write a letter to the editor if I disagreed with the Princeton University professor's claims. Having read the piece, I told the passenger over my shoulder, "You bet I will."

Prof. Blinder seems blind to the clear and present dangers of QE2.

Instead of seriously discussing these dangers, he takes us on an excursion to a Keynesian utopia, a mythical land in which endless government spending is an amazingly effective job creator and investors' confidence in U.S. Treasury bonds somehow increases as we sink ever deeper into debt while the Fed has its printing presses working overtime.

Here are some cold, hard facts from the real world: The first is the 8.7% 2012 unemployment rate predicted by the Survey of Professional Forecasters of the Federal Reserve Bank of Philadelphia. It seems the Obama administration's record spending binge won't result in job creation, but in unacceptably high long-term unemployment. The second fact is that long-term interest rates have actually gone up following the Fed's recent QE2 announcement. The markets took one look at the Fed's pump-priming plans and decided they had to increase interest rates—probably in order to compensate for the expected rise in inflation.

None of this should come as a surprise. Blinders off, common sense engaged, it's time for us to "refudiate" the notion that this dangerous experiment in printing $600 billion out of thin air, with nothing to back it up, will magically fix economic problems that were caused in large part by the government's interfering with our free market system in the first place, and then made worse by the government's reckless spending experiments with our children's fiscal future. Instead of the tired, old Keynesian ideas behind Obamanomics, we need to turn to time-tested practices that are pro-free market rather than pro-big government. Some call this "free-market populism." It's based on the realization that the best way to get the economy moving again is to get government out of the way, let the free market dictate winners and losers, and allow the private sector to grow our economy one job, one paycheck and one American dream at a time. It's the only way we can restore much needed confidence and certainty in our economy. This is the only way we will all be able to soar from New York to Los Angeles and throughout the heartland.

Sarah Palin

Wasilla, Alaska


EOG Dedicated
Re: Sarah Palin: Obama?s Clever Way to Punt the Tough Calls: Driving the Dollar Down

Anytime you try to create inflation to get you out of a recession you are going to lose.Enough said.
Re: Sarah Palin: Obama?s Clever Way to Punt the Tough Calls: Driving the Dollar Down

$arah talkig about punting? Didn't she resign as Alaska governor to pursue a career in money making? Odd you would use the word "punt" in this thread . . .
Re: Sarah Palin: Obama?s Clever Way to Punt the Tough Calls: Driving the Dollar Down

oh but she will leat long enough to dupe backers out of say - $20m in donations, And then she spends $10m, pockets the other $10m and tells her marks it's all the fault of Lamestream media.


EOG Dedicated
Re: Sarah Palin: Obama?s Clever Way to Punt the Tough Calls: Driving the Dollar Down

If $arah wins the nomination, it will be the end of the Republican Party