Strengthening Constitutional Self-Government

No Left Turns

Back to the 70s?

At the Wall Street Journal, Allan Meltzer suggests that Ben Bernanke is taking the country down the road it was on in the 1970s:

A country that will not accept the possibility of a small recession will end up having a big one when the politicians at last respond to the public’s complaints about inflation. Instead of paying the relatively small cost of a possible recession, the public pays the much larger cost of sustained inflation and a deeper recession. And enduring the deeper recession is the only way to convince the public that the Fed has at last decided to slow inflation.

True, but it’s not only the Fed that’s at fault here. The White House and Congress will deserve shares of the blame thanks to their massive Keynesian "stimulus package."

Discussions - 4 Comments

The Fed's recent behavior is in sharp contrast to the European Central Bank. The ECB keeps its eye on both objectives, growth and low inflation. It doesn't shift back and forth from one to the other.

Good idea. Let's not forget that people's dependence on credit companies and their inability to spend responsibly when given the opportunity to utilize credit is also extremely problematic. Europeans don't use credit nearly as much as we "must-conspicuously-consume-biggest-and-best-thing-NOW" Americans.

I guess I'm not sure the government is completely to blame here. They have a much more materialistic, consumerist populace to deal with than the ECB.

Matt, what are you talking about, the government is not responsible? The government is intervening in the private market protecting people who could not pay mortgages while I made every payment on mine and took out a smart 30 year fixed mortgage at a good rate. The Republicans and Democrats blithely submit multi-TRILLION dollar federal budgets. The national government is being burdened by a massive debt, and what does it do for your consumers that you attack, GIVE THEM MORE MONEY in the tune of hundreds of billions of dollars. Don't get me wrong, I want to reduce taxes, but one has to reduce the government and its spending to do so. So what do we do? Pass prescription drug coverage just as the baby-boomers are retiring, and the Democratic candidates are supporting a national health insurance program for further intervention and massive costs. But, I guess it's an election year, so massive promises of more spending and tax cuts for the middle class are the order of the day.

And, the government is not to blame. Because politicians would allow a painful, short recession just before the election. Right.


You ask: Matt, what are you talking about, the government is not responsible?

I respond: I guess I'm not sure the government is completely to blame here.

My only point was that American culture emphasizes spending more than one has much more than its European counterpart. I'm not saying the government is off the hook.

Americans elect their government. In fact the voters constitute the fourth and most powerful branch of government. They can't blow off responsibility for what the people they elect do.

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