Thursday, April 28, 2011
Bernanke Does His Job So You Don't Have Yours
Bernanke Does His Job So You Don't Have Yours
By John Ransom
Fed Chair Ben Bernanke got through his first press conference without much more damage than a government-sponsored bond repurchase program.
But he basically all but admitted that QE2 has been a failure if we judge it from the Fed’s mandate to fight inflation and provide full employment.
The last time I looked inflation was out of control and unemployment wasn’t much better.
CPI is running at .5 percent a month and could bring us inflation rates of double digits by fall.
Unemployment is persistent too. Ben said that we’re still seven million jobs short of where we were before the “crisis.”
At least we now know how much misery $4 trillion buys.
If you are keeping score at home, that’s $571,428.57 for every job not saved/created by the government’s extraordinary expenditures.
Bernanke defended the program of quantitative easing saying the program was successful- it did what they meant it too. It got the economy pointed in the right direction.
This explains the disconnect between Washington and the folks back home. Only 22 percent of those folks think the country is pointed in the right direction.
QE2, says Bernanke, was never meant to be a panacea for the economic crisis.
OK, but was it meant to be a suppository?
He also called the economy the worst since the post-war.
I'm assuming he meant World War II. Have we actually ended any wars started since then?
And therein lays the problem. Ben still thinks that it’s 1972 and that giant men dictate war and peace from an area between Foggy Bottom and the White House.
He conceded however that the benefits in following a loose money policy were getting smaller. That’s good because I don’t know how much more benefit the country could take.
He said that inflation has gotten higher, but since wage inflation remained under control he saw inflation concerns as transient not systemic.
High gas prices are the price one pays for economic recovery I guess.
It's a small price too, relatively, because, you know, not that many people have to worry about commuting to a job.
Think of the expense if we had full employment.
I guess the Fed thinks that would be too expensive.
End the Federal Monopoly on Energy
By John Ransom
FROM THIS MONTH'S TOWNHALL MAGAZINE:
Let’s get to the truth about energy security.
The biggest problem with our energy policy in this country isn’t the lack of direction by the federal government. Nor is it speculation. Sure loose money policies by the Fed have pushed prices up this year substantially. But that not our biggest problem either.
No. Instead, it’s lack of free markets for energy. We lack free markets because the federal government gets involved in our energy decisions. The feds, in short, act as a kind of monopoly for the energy supply.
Let’s start with OPEC.
OPEC is a cartel, not a monopoly. Yet, OPEC engages in behavior that US Congress would never tolerate by monopoly sports leagues that enjoy anti-trust exemptions.
At cartel is, by definition, anti-free market. A cartel engages in activities, which, were they to happen in the US by any industry group, would be deemed illegal. OPEC fixes prices, regulates supply and acts in concert with their members to control the market for oil. While Congress wrings its hands over AT&T and NFL anti-trust matters, they ignore the anti-trust implications of our OPEC allies have on 5 percent of our economy as measured by GDP.
Our involvement in several wars because of oil isn’t a dirty secret, but a geopolitical reality. In the larger context, however, free markets for oil in the Middle East must be one of the reforms the US demands from our Middle East partners. A free people can not exist without free markets. For years, regimes in the Gulf States have clung to power by clinging to manipulated markets in oil. The oil money has allowed them to paper over a lot indiscretions, including the indiscretion of shutting out the modern world.
But all of that seemingly is coming to an end for regimes from North Africa to Persia. And our substantial investment in the region in money and blood demands that we get free markets for oil in return for our commitment to the security of the region.
Or we leave.
We have more energy in shale oil and gas under the Rocky Mountains states of Colorado, Utah and Wyoming than Saudi Arabia has proven reserves. However, the markets don’t work because the US owns much of the land in the Rockies under which that energy is found.
Even before Obama became president the national government was hostile to our most abundant source of energy, coal. Obama openly bragged about bankrupting the coal industry if he became president.
It might be time to take those boasts seriously.
"Coal is a dead man walkin'," Kevin Parker, global head of asset management and a member of the executive committee at Deutsche Bank told the Washington Post. "Banks won't finance them. Insurance companies won't insure them. The EPA is coming after them. . . . And the economics to make it clean don't work."
Despite this, the administration still earmarked $800 million from stimulus dollars for the Department of Energy to experiment with “clean coal” technology.
Like so many things when the government gets involved, the right hand has no idea what the left hand is doing. It’s likely willful blindness though. The DOE stimulus money is exactly the type of frivolous pork-barrel expenditure that those favoring earmark reform point to as wasteful and irresponsible.
Some think that recent discoveries of immense natural gas formations in the US will provide a bridge to a distant, future day when the federal government will discover a cheap, clean alternative to our energy problems.
The Department of Energy requested $28.4 billion for fiscal year 2011 to pursue such a chimera.
Until the monopoly of power the feds wield on energy is broken up, that’s not just a waste of money, it’s a waste of energy too.
To read another article by John Ransom, click here.
Posted by Brett at 1:24 PM