"A wise and frugal government which shall restrain men
from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government."
(Thomas Jefferson)

Thursday, August 18, 2011

Wall Street Journal: Perry's Public Service

The Wall Journal has more on Gov Perry's comments about the Fed and explains how it is right to bring the Fed into the public discussion in this campaign.  Regardless of what the Obama Media and some conservative writers are saying, Governor Perry is not like President GW Bush in many areas.  The key is that Perry was raised in West Texas and went to college at Texas A&M while Bush was sent by his parents back east to boarding school and then to Yale and eventually Harvard.  Right there you would see a huge difference down to how they view Wall Street and other issues.
The media trope of the week is that Mr. Perry is George W. Bush only more so, but he clearly isn't the same on monetary policy. Mr. Bush, who first appointed Mr. Bernanke, was an easy-money, weak-dollar President. He and his former economic advisers still don't understand how Alan Greenspan's policies at the Fed contributed to the credit and housing manias that led to the financial meltdown that caused the GOP's political undoing in 2008. 
Maybe it is being from Middle America, but we were aghast when the very liberal Senator Schumer (D-NY) recommended Bernanke to Bush to lead the Federal Reserve and he accepted him.  President Bush was a nice man but the people he chose to surround himself with in his second term didn't do him any favors.  He should have stayed away from Wall Street and Bush 41 for his economic advisors and gone to the Reagan side of the House.  In the last few days no one has highlighted the difference more than David Stockman who was the head of the Office of Management and Budget for President Reagan (1981-1985).  As we have pointed out on here in several articles, Stockman is adamant that the Fed should not be interfering in interest rates and that is a large part of the problem with the economy.
Note well that the main Fed dissenters from Mr. Bernanke's monetary policy have been from the regional Fed banks. These bank presidents are appointed by regional boards, not by Presidents. One reform to consider is whether the Fed's Open Market Committee, which sets monetary policy, should be changed to include more regional presidents who are better insulated from the political pressures of Washington.
Until reading that paragraph above, I wrongly assumed that the Fed's Open Market Committee was made up of all the President's of the regional Fed banks who are not appointed by any President.  Who sits on the Fed's Open Market Committee?
The Federal Open Market Committee (FOMC) consists of twelve members--the seven members of the Board of Governors of the Federal Reserve System; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco. Nonvoting Reserve Bank presidents attend the meetings of the Committee, participate in the discussions, and contribute to the Committee's assessment of the economy and policy options.
All total there are only four regional Presidents of the Fed along with the President of the NY Fed.  So at the last Fed meeting, 3 out 4 regional Presidents were against Bernanke keeping interest rates so low into 2013 but were overruled by political appointees by the President.  If all regional Presidents plus the President of the New York fed voted together, they are still outnumbered by the political appointees of the Presidents 7-5.  After learning that, I watched the video from David Stockman on Schumer's  Fed Chair Bernanke.  Now our bad economy is making more sense and Governor Perry's words did hit their mark.

David Stockman: Fed Chair Ben Bernanke 'doesn't have a clue': 

As you watch the video, Stockman points out that we have no more people employed today than we did 12 years ago.  We have had stagnant employment for all those years.  What has the Fed done?  They have been keeping interest rates artificially low and now near zero instead of  allowing interest rates to settle on their own.  That has led to the Wall Street fat cats getting richer and the middle class losing much of their savings.  What savings they do have, they are receiving next to nothing in interest.  Finally someone is speaking out and honestly think that Governor Perry's choice of words is probably why this has gotten so much press for which we thank the Governor.
Merely by raising the Fed as a subject, Mr. Perry has sent a political signal to the folks at the Eccles Building to tread carefully as they conduct monetary policy in the coming months. This alone is a public service. Mr. Perry and the other GOP candidates should be more careful in their language, and more precise about the Fed's mistakes. But they shouldn't shrink from debating the subject of sound money that is so crucial to restoring American prosperity.
They hypocrisy of the this inside the beltway/east coast Obama media is stunning when you stop to think that the Vice President of the United States called the members of the Tea Party "terrorists" a few weeks ago.  Those words received very little press in comparison to the uproar of the Obama media on Perry's comments.

The Tea Party has been very vocal but they are not thugs like those who inhabit the SEIU and the Teamsters who don't think twice of beating up someone they don't like or who doesn't agree with them.  Maybe the media forgets the incident in St. Louis against the young black man from the Tea Party being roughed up by the SEIU thugs (video below).  How about the damage the SEIU did to the Wisconsin Capitol Building and all the trash they left around in Wisconsin during their sit-in and rallies against Governor Walker and the Legislature?  There is video after video of the thugs from the SEIU and Teamsters on You Tube attacking members of the Tea Party who were doing nothing except expressing their First Amendment rights.

Let's play the devil's advocate here:  If an individual(s) is using Fed monetary policy that weakens the dollar causing our economy to tank, is that person a patriot?  I sure don't think so.  Do I think that tanking the US monetary system with weakening the dollar is akin to an agenda that is treasonous -- guess you could me on the side of Perry on that one.  Since redistribution of wealth is a socialist agenda, that is exactly what we are seeing today with the rich getting richer and middle incomes stagnant and now falling with the much higher prices for groceries and gas.

How in good conscience could Obama and his economic advisers put a freeze on social security and civil service raises for two years while his people in the White House received an 8% raise this year?  To add insult to injury, the price of healthcare went up so social security recipients now make less than they did two years ago.  Yet the AARP continues to support this Administration?

We need Governor Perry to speak out so America understands what the Fed and others in this Obama Administration are doing.  Is he angry? You bet he is along with a lot of us out here in Middle America and the South who are being impacted by the EPA and other Government entities and see our budget for food and fuel increase dramatically under Obama.

If the East Coast liberals don't like how a Texan talks, that's too bad because those of us in flyover country don't like their liberal policies that have tanked this economy.  We will take a plain spoken Governor who tells it like it is any day of the week versus a weak-kneed President who is too lazy to do his job and always is touting his plan that we never see it.  Now we are going to see it in a few weeks or maybe a month or two. Maybe he will wave his magic wand and it will appear.  Guess it is taking the Goldman Sachs/academia people longer to write a plan than he expected.  (sarcasm) This milk toast President who has thrown so many people under the bus over his tenure when they might hurt his image should go back to be a community organizer because it is sure not working as President.

This editorial is written by someone who understands Texas after referencing the Texas Hill Country and Henry B. Gonzales. When you think back to the days in Congress where the Democrats were more conservative on financial policy, you realize why so many fiscal conservative Democrats have become Republicans like Rick Perry.  The Democrat Party of old with people like Sam Nunn, Sam Rayburn and Carl Albert doesn't exist after being taken over by extreme liberal progressives starting with the 2006 election of Harry Reid as Majority Leader of the Senate, Nancy Pelosi as Speaker of the House, and Obama as President two years later.  Unlike the Obama media, we will use the term liberal.

In 2010, we replaced Pelosi as Speaker with Republican John Boehner and 2012 we will replace Reid and Obama in order to get America back on the road to economy recovery.  Obama talks shared sacrifice as he flies around Country on Air Force One along with adding a new agency for jobs, and giving many of his White House staff 8% pay raises. Is Obama giving up traveling and his lavish White House parties as part of shared sacrifice?  Highly doubt it.   The shared sacrifice is only pertains to the American taxpayer as the free spending liberal progressive Democrats could care less about those in America's Heartland!

The media may not like Governor Perry's choice of words but he sure made a point about the poor leadership of Bernanke whose claim to fame was the CEO of Princeton's Economic Department before heading the Fed.  In other words, when an Obama person on the economy is not from Wall Street, they are from academia?  Sitting here shaking my head because east coast academia is filled with liberals and socialist -- conservatives need not apply.  This Schumer backed person is the one setting our Fed policy ignoring the comments of the regional Fed Presidents?  Think that sinking feeling just sank more!
Perry's Public Service
Behold, a hard-money Texas politician.
As the world's right-thinkers are denouncing Rick Perry for suggesting this week that Texans would get "pretty ugly" with Federal Reserve Chairman Ben Bernanke if he guns the money supply any more between now and the 2012 election. His poor choice of words aside, the Texas Governor is right to put monetary policy front and center in the 2012 Presidential debate. 
Let's stipulate that Mr. Perry, in his first week on the Presidential stump, was wrong to use the words "almost treacherous, treasonous" in referring to Mr. Bernanke. Both of those words ought to be reserved for specific acts of betrayal against America, and the Fed chief is certainly a patriot. In particular, "treason" is the only crime specifically defined in the Constitution, which is something a tea party politician ought to learn. 
On the other hand, everybody knows Mr. Perry meant no literal harm and was indulging the irrational exuberance that is one of his trademarks. The faux-outrage from liberals who routinely refer to the tea party as "terrorists" shouldn't be taken seriously. 
The real news isn't the rhetorical gaffe but the substance and politics of Mr. Perry's demarche. Here we have a Presidential candidate, a Texas populist no less, laying out a position in favor of sound money. This is a bear walking on its hind legs. The ghosts of Wright Patman and Henry B. Gonzalez are howling in the Hill Country. 
Mr. Perry seems to appreciate that the Federal Reserve can't conjure prosperity from the monetary printing presses. His articulation needs some work, but we hope the Texan doesn't let media and other criticism deter him from pursuing the argument. The issue is crucial to understanding—and explaining to the American public—how the meltdown happened and why Americans are so unhappy with the current recovery. 
The Texas Governor has a better insight into middle-class economic anxiety than do most Washington-Wall Street elites. Americans intuitively understand that their after-inflation incomes haven't risen for a decade. Even when incomes rose during the growth years from 2003-2007, the gains were undermined by the rising cost of housing, as well as by rising food and energy prices. 
Then huge chunks of middle-class net worth were wiped out in the panic. And now, even as the recovery is supposedly underway, their meager salary increases are being washed away with another burst of commodity inflation caused by near-zero interest rates and quantitative easing. This is what happens when politicians and central bankers try to use monetary policy to compensate for the slow growth caused by bad fiscal and regulatory policies. 
The Texas Governor, or one of his advisers, may also have noticed that various economic sages are offering inflation as the solution to America's debt problem. Harvard economist Kenneth Rogoff has suggested that an annual 4% to 6% rise in the price level over several years would do the trick. Assorted columnists are picking up the theme, and our guess is that the Obama Administration is privately on board. By all means, we need a debate in 2012 over Fed policy.
The U.S. also needs a debate over the Fed's political independence. In our view, that independence has been compromised over the last 15 years as Messrs. Greenspan and Bernanke allowed themselves to get too close to the White House and Treasury. The Fed's post-crisis interventions have put the central bank in the middle of decisions about fiscal policy and the allocation of credit. Mr. Bernanke sometimes seems to be a veritable arm of the Treasury, reinforcing its fiscal and regulatory agendas at every opportunity.
Excerpt:  Read More at the Wall Street Journal or view the video of Bartley Fellow, Charlie Dameron, on Texas Governor Rick Perry's liabilities as a GOP presidential candidate. 

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