Palin v. Bernanke

A year ago I wrote The Palin Brand. In Jan ’10, Palin is framing the debate. “my common sense v your bullcrap” .and wrote “They will live to regret, if they don’t already, that they forced Palin to resign from her Governorship by harassing her with 15 ethics lawsuits thereby freeing her to go on the attack nationally. More than anyone else, she is responsible for the decline in the prospects, for not only Obamacare but for Obama’s presidency as well.. In March ’10, Palin is one of a kind In May ’10, Palin is on a Roll. I loved re-reading these articles. Hopefully you will too. Having said that, the NY Sun has outdone me.

Her Warning To the Fed Chairman Puts Her Out in Front on the Debate on the Dollar

Editorial of The New York Sun | November 8, 2010

One of the questions in respect of 2012 is how it has happened that the only major Republican figure, aside from Congressman Ron Paul, to stand up and be counted in respect of the dollar is Sarah Palin. She is supposed to be an ex-beauty queen without a lot of sophistication. Yet she is reportedly scheduled to be in Phoenix today delivering a major address challenging the plan of the chairman of the Federal Reserve, Ben Bernanke, to inflate the dollar. Snippets of her text were put up Sunday on the National Review Online and began immediately rocketing around the globe, no doubt in part because of the Palinesque phrasing, in which she called on Mr. Bernanke to “cease and desist.”

Now we don’t mind saying that the Sun has been looking forward to the Alaskan breaking out on this issue. In October 2009, we issued an editorial called “Palin and Paul,” in which we noted that those waiting for a politician to pick up on the monetary issue were perking up to a posting on Mrs. Palin’s Facebook page, which she had noted that the Gulf oil states were reported to be negotiating with Russia about abandoning the dollar as a unit of pricing, observed that an official of the United Nations had called for a new world reserve currency, and, most importantly, warned that the value of the dollar was collapsing in terms of gold. Her posting, we wrote, suggested that she was ahead of the rest of the undeclared contenders for 2012.

At the time, the value of a dollar had slide to just less than a 1,000th of an ounce of gold. Today it has plunged to barely better than a 1,400th of an ounce of gold. In other words, in the year since Mrs. Palin took up this issue, the Bernanke Dollar — or the Obama Dollar, or the Pelosi, as we’ve sometimes called it — has lost a third of its value. The chairman of the Federal Reserve is now on an announced plan to try to inflate it further. So far the Congress that has oversight of the Federal Reserve has been largely mute, though there have been some notable exceptions (Congressman Paul Ryan, for example, and Dr. Ron Paul, of course; among the big newspapers, only the editorial page of the Wall Street Journal has been in front of this issue).

We were struck, reading the Robert Costa’s National Review advance on Mrs. Palin’s speech, with the reach of her warning. She attacked QE2, as the second quantitative easing of monetary policy is called, head on. “The Fed hopes doing this may buy us a little temporary economic growth by supplying banks with extra cash which they could then lend out to businesses. But it’s far from certain this will even work. After all, the problem isn’t that banks don’t have enough cash on hand – it’s that they don’t want to lend it out, because they don’t trust the current economic climate. And if it doesn’t work, what do we do then? Print even more money? What’s the end game here?”

Mrs. Palin is looking over the horizon: “Do we have any guarantees that QE2 won’t be followed by QE3, 4, and 5, until eventually — inevitably — no one will want to buy our debt anymore? What happens if the Fed becomes not just the buyer of last resort, but the buyer of only resort?” She comprehends how it is going to get to the voters she’ll be courting. “[E]veryone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher. And it’s not just groceries. Oil recently hit a six month high, at more than $87 a barrel. The weak dollar — a direct result of the Fed’s decision to dump more dollars onto the market — is pushing oil prices upwards. That’s like an extra tax on earnings.”

The worst part of it, in Mrs. Palin’s warning, is that “because the Obama White House refuses to open up our offshore and onshore oil reserves for exploration, most of that money will go directly to foreign regimes who don’t have America’s best interests at heart.” In other words, she is reasoning out a coherent economic and geopolitical argument that she and her party — Tea, if not the mainstream GOP — can take to the voters. She is moving effortlessly from her Facebook page, which has more than 2.3 million friends, to our intellectual journals. So as we asked at the outset of this editorial, how has it happened that she is the first to brand this issue?

Was it her time running a state whose economy is tied to oil, which often tracks gold? Is it that she can see Russia from her door? Is she just smarter than the other candidates? Is it her savvy, and her husband’s, at running a fishing business? Is it her journalistic instinct? Or does she read more papers than Katie Couric? No matter, she is now out in front of yet another issue as there is about to convene a new Congress of the United States in which she has a brace of allies indebted to her for her help in getting elected. Mr. Bernanke seems to have blithely ignored his other critics, but it will be more dangerous to ignore the Mamma Grizzly.

November 8, 2010 | 13 Comments »

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13 Comments / 13 Comments

  1. Yamit writes:
    The loss of Delaware could have given the republicans and the so called conservatives in the party a tie or a majority in the Senate. Everybody knew that O’donnell would lose.

    Poppycock. No one knew that for sure, just as no one knew whether Sen. Castle, whom O’Donnell beat in the primaries, would win in such a liberal state. If such guesses could win elections there would be no point in having elections.

    Everybody knew that O’donnell would lose. Those independents wouldn’t buy and won’t buy Palin either.

    This is what we call knowing bubkis. Someone needs to sit Yamit down and explain to him that Delaware is not like the US. If it were the Republicans would not have won over 60 seats in the House, some 6 seats in the Senate, and dozens of Governorships and state legislatures around the country.

    Vince Lombardi said ” Winning is the only thing”. Most Americans are not aligned to a political party and certainly not conservative on most value and fiscal issues.

    Vince Lombardi was right, but quoting him in this case is wrong because by electing RINO’s who then vote with the Democrats is not a prescription for winning consistently.

    Did I say Yamit knows bubkis? Here’s another example. Polls have consistently shown that 41% of Americans call themselves “conservative” politically, whereas only 20% see themselves as “liberals” politically. Many of the remaining 40% are center-right but do not want to be identified as conservatives. This is why for a center-right country to elect Obama, a virtual communist, was a huge aberration, which is being corrected now that Americans have realized to their horror what an epic mistake they have made.

    I like O’Donnell but I would probably have voted against her if I believed she had no chance of winning and all polls showed that an almost impossibility.

    So much for voting on principle. This is probably the kind of thinking that caused those 78% of American Jews voted for Obama.

  2. Chris Christie is one of the solid rising conservative stars like Rick Perry, Marco Rubio, Bobby Jindal, Nikki Haley and Michele Bachman among many others. Most American presidents have come from the Governor’s mansions because of their executive experience. However, Christie unnecessarily sullied his conservative credentials by endorsing an unreliable RINO like Sen. Castle in Delaware over a solid conservative like Christine O’Donnell.

    Christi is a smart and rational human being. The loss of Delaware could have given the republicans and the so called conservatives in the party a tie or a majority in the Senate. Everybody knew that O’donnell would lose. Those independents wouldn’t buy and won’t buy Palin either. Now I don’t know Casatle or care it’s numbers that count in elections and the conservative right is still a minority even in the Republican party.

    as Vince Lombardi said ” Winning is the only thing”. Most Americans are not aligned to a political party and certainly not conservative on most value and fiscal issues. this election was a pissed off electorate against the Democrats and Republicans but gave the Republicans a chance this time. Next it could go the other way. They won’t buy into the excuse that the Republicans don’t own both houses.

    I like O’Donnell but I would probably have voted against her if I believed she had no chance of winning and all polls showed that an almost impossibility.

  3. Yamit writes:
    Bachmann predates Palin by at least a year maybe more yet you give all the credit to Palin.

    Michele Bachman, who is a solid Tea Party conservative, is still several steps behind Palin in the conservative and Tea Party hierarchy. Palin has always supported common sense conservative principles, which includes not deflating the currency.

    Chris Christi seems to be the favorite of the Republicans today and he isn’t even trying.

    Chris Christie is one of the solid rising conservative stars like Rick Perry, Marco Rubio, Bobby Jindal, Nikki Haley and Michele Bachman among many others. Most American presidents have come from the Governor’s mansions because of their executive experience. However, Christie unnecessarily sullied his conservative credentials by endorsing an unreliable RINO like Sen. Castle in Delaware over a solid conservative like Christine O’Donnell.

  7. The Fed steps out of the shadows:

    To implement the Federal Reserve’s new policy of quantitative easing, the New York Fed plans to buy $850 billion to $900 billion in Treasury notes over the next five months, including $600 billion in new purchases and about $250 billion to $300 billion to reinvest the proceeds of maturing mortgage-backed securities, the New York Fed announced Wednesday.

    The average duration of Treasurys purchased by the Fed will be five to six years. Around the eighth day of each month, the Fed will announce the details of that month’s planned purchases.

    Ray Humphrey, senior vice president with Hartford Investment Management Co., said the Fed was concentrating its purchases on the 5-10 year part of the Treasury yield curve because it wanted to aid the housing sector and mortgage finance.

    He said that holders of 30-year bonds now face a risk if inflation rears back.

    “The 30-year has become an orphan,” he said.

    Including the Fed’s reinvestment of maturing MBS, estimated at roughly $35 billion, the central bank said it expects an average purchase pace of roughly $110 billion per month.

    To provide flexibility, the Fed said it is temporarily relaxing a rule that it holds only 35% of a specific Treasury issue.

    The Fed seems to be or is becoming the largest holder of American debt. The debasing of the dollar will come home to destroy the whole American economy.

    I see an end to globalization as we know it soon. Nobody will want to trade in devaluing dollars. I convert mine as soon as I get them. The Israeli shekel is a better bet than the dollar. If it weren’t for the Bank of Israel buying billions of dollars here the exchange rate would go through the roof in favor of the Shekel.

    As long as the price of oil is above 30 dollars bbl. there is no chance for real economic growth minus inflation.

  10. I agree. I read Bachmann’s letter to them before he went public and her going public with it. And she is a major figure.

    Bachmann predates Palin by at least a year maybe more yet you give all the credit to Palin.
    Chris Christi seems to be the favorite of the Republicans today and he isn’t even trying.
    Chris Christie On Hannity – June 30 2010 , FoxNews
    Conservative Governor on his “confrontational tone”
    NJ governor Chris christie for President ?
    Chris Christie Slams Obama’s Stimulus Plan

  11. The Fed steps out of the shadows:

    The Fed was created by Congress to do things in private which Congress could not do in public. Their job is to do whatever is needed to keep the American economy steady. They have no checks and balances, and can do whatever they think is best. Usually they do not do things which are drastic. The members are chosen for their good judgment and common sense.

    So now we should really worry. Quantitative Easing, part deux (QE2) is an apparent act of desperation. It is one more big stimulus, which Congress did not have to pass, and which the Republicans (including the Tea Partiers) allowed to go forward without saying a word. To create this stimulus, the Fed created 600 billion dollars out of thin air, and used it to buy Treasury bonds. The Treasury deposits the “money” in our banks, making it easier for them to lend. In theory, when the economy responds and government revenues increase, the Treasury can pay back the Fed.

    What’s wrong with this picture? The main thing is the economy can never recover. While America was not paying attention, Chinese and other foreign workers have come to outcompete American workers. They can make anything America can, for far cheaper. So America cannot recover. And America keeps on shipping dollars to China to buy things made in China. And just to keep from declining further, America has to create new dollars to replace the ones shipped to China. This normally results in inflation and a worthless dollar, but the world is allowing America to get away with it so far. The world will experience a second Great Depression when this system collapses. China is hoping to use its dollars to grow more powerful, and create a self-sustaining consumer state within its own billion plus people, which will not be affected by the second Great Depression when it comes to the rest of the world.

    So America is desperately treading water and trying to keep afloat, while for China, it’s full speed ahead.