While a case could have been made for Ben Bernanke's Fed plan to print money to buy government debt, is the timing of this plan good monetary policy or just bad politics?First of all this scheme confirms the fault inherent in the Obama, Krugman, Keynesian stimulus theory. The federal government doesn't have the ability to print money so when it embarks on a spending binge, like the stimulus, it has to get it somewhere. So it sells government bonds. Now, much has been made by pundits that the Chinese are financing our government debt. But the Chinese aren't even the largest foreign buyer anymore. The Japanese are. In fact the Chinese were actually net sellers of U.S. debt in December of last year. They only represent about 10% of all debt purchases. By a large margin the U.S. debt is held by U.S. investors, companies, pension funds and local government units. We owe the debt to ourselves. So when the government is in the market competing for capital it in effect crowds out...(Read Full Post)