Politics, not economics
The US looks like much more paralyzed than before, which would ruin any chance of making an economic policy effective enough to weather one of the toughest times ever in history facing the country.
Recent attack against the Fed's quantitative easing is based on politics, not economics, largely encouraged by a huge gain of Republicans (and a terrible loss of Democrats as the other side of the same coin) in the midterm elections. Winners are ferreting out a pray for revenge. A pray worth while flaunting their new power. Then, the Fed has been chosen as a sacrifice. It doesn't matter whether the Fed Chairman Ben Bernanke is a republican or not.
Bernanke has just received two open letters to him: one from economists and the other from politicians, both of which criticize the latest Fed's move to buy $600 billion of Treasury securities, called QE2, for risking a cheap dollar, an asset bubble, and uncontrollable inflation.
This is not the first time for the Fed or Bernanke to be exposed in political backlash on the course of monetary policy. But it would be really daunting if the Fed is constrained by partisan politics when the US Congress is quite incompetent to churn out a timely policy as a result of the midterm elections, and hence monetary policy is the only way to counter the downturn.
In October, core CPI, CPI excluding volatile goods like food and energy, has increased only 0.61% over the year, the smallest on record. Taking it into account, few would doubt why printing more money is still justified to fend off disinflation or worse deflation which has crippled Japan for years.
By the way, the second smallest is 0.65% in 1961.
Recent attack against the Fed's quantitative easing is based on politics, not economics, largely encouraged by a huge gain of Republicans (and a terrible loss of Democrats as the other side of the same coin) in the midterm elections. Winners are ferreting out a pray for revenge. A pray worth while flaunting their new power. Then, the Fed has been chosen as a sacrifice. It doesn't matter whether the Fed Chairman Ben Bernanke is a republican or not.
Bernanke has just received two open letters to him: one from economists and the other from politicians, both of which criticize the latest Fed's move to buy $600 billion of Treasury securities, called QE2, for risking a cheap dollar, an asset bubble, and uncontrollable inflation.
This is not the first time for the Fed or Bernanke to be exposed in political backlash on the course of monetary policy. But it would be really daunting if the Fed is constrained by partisan politics when the US Congress is quite incompetent to churn out a timely policy as a result of the midterm elections, and hence monetary policy is the only way to counter the downturn.
In October, core CPI, CPI excluding volatile goods like food and energy, has increased only 0.61% over the year, the smallest on record. Taking it into account, few would doubt why printing more money is still justified to fend off disinflation or worse deflation which has crippled Japan for years.
posted by Akihiro Gotoda at
11:53 PM
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