Obama and Bernanke: Double-Whammy Disaster
Interest rate historian and contrarian guru James Grant put the double-whammy actions of Ben Bernanke and President Obama into perfect perspective Thursday when he noted that the Fed had moved past "central banking into central planning." Bingo! Grant went on to say that the Fed was "trying to impose prosperity through manipulation." Bingo again!
Think about that phrase -- "to impose prosperity through manipulation." It is brilliantly succinct and accurate in describing what is going on in our nation's economy.
And indeed, it is exactly what has been going on for months and it explains why Wall Street has done infinitely better than Main Street since the meltdown of 2008 bottomed out. Reality tells us that all of this central planning and manipulation is unsustainable. It is not based in Main Street reality. This is why we are seeing the incredible ups and downs in the market currently. Call it the "there's no there there" volatility. Because there is no there there. There is no real recovery. There is simply "money on the sidelines" and the Fed chairman's confusion on what causes the fear that firmly planted it there.
To put it simply, Bernanke and the Fed are trying to save the country from Obama's statist agenda by infusing phony dollars into the economy. To the academically inclined yet reality-challenged Bernanke, the blackboard equation says that if you pump enough money into the economy, the stock market will roar and companies will be motivated into investing in jobs, capital equipment, and other accompaniments of expansion because their balance sheets are so fat and happy.
What banker Ben and the rest of the Ivy League elites in our government media complex miss is that outside the bubble that is the Beltway and Manhattan, business owners and entrepreneurs are on strike. They are striking because behind every surface opportunity are dozens of smarmy government bureaucrats and IRS agents ready to snatch away any gains you might make on Main Street. Folks are hunkering down and hoping this "transforming America" stuff will soon pass. That means they are not hiring and they are not buying capital equipment.
This is why the administration pouted last week that corporate America is not doing their fair share. Translation: business owners have the audacity to not to want to risk and invest everything only to have some minions from the EPA or the NLRB or OSHA come and steal it.
Meanwhile, consumers don't have the money to spend because many are out of work, and others fortunate enough to be gainfully employed are out of confidence that they will stay that way. And of course, the value of their homes and any other real estate they may own has been shredded as a result of government meddling into the mortgage and housing markets. So we have scared workers hanging on by a thread and depressed non-workers who have given up hope by the millions. That's our consumer base. So how's that consumer spending working out for you?
It's not, unless you happen to have a sushi bar or coffee shop near some government office building, so that a bloated bureaucracy can come and fill your cash register with salary dollars confiscated from living taxpayers and borrowed dollars from unborn taxpayers. Life is good if you are a government bureaucrat, or if you can sell goods or services to them. Or if you are an anointed crony CEO and you produce the "right kind" of goods and services. And if you are in any of these camps, you probably will vote for more of the same and donate to those who support that agenda.
Simply, this government dynamic threatens to swallow us all whole.
And I submit that folks are sensing that, even if they haven't been able to put their fingers on just what it is that has them so depressed and gloomy about their futures and those of their children. They may think the oil companies are swallowing us or that insurance companies are swallowing us -- and we have an administration and sycophantic Jurassic media happy to feed those misguided notions -- but the reality is that it is government that is the 800-pound gorilla. Everyone else has one foot in the grave and the other on a banana peel.
And that gorilla grows at 8 percent a year, by the way.
And that's the incongruent tug of war going on in our economy. Obama, Reid, and Pelosi have done everything they can to discourage and punish success and hard work and private investment since 2007. And it's worked. We are discouraged.
Meanwhile, Bernanke ruins the value of our dollars and the promise of our futures by printing so much money, in hopes we won't notice what Obama and the other liberals in Congress are doing to reality. As James Grant said, this is an attempt by the central bank to be a central planner by imposing prosperity on us through manipulation.
But reality has a funny way of not bending permanently to manipulation. Reality is showing through in the fact that we have fewer adults working now than at any time since the early '80s. It's showing up in a stock market that can swing down 500 plus points several times in the same week. It's showing up in that gnawing feeling we all have that something has gone dreadfully wrong.
Our gnawing feeling is of course justified. Thank you Mr. Grant for hitting the nail on the head as to just why this is so.