Governor Rick Perry may have turned out to be a disappointment as a candidate, but let's give him credit for this: he warned us of the possibility that the Federal Reserve would start printing up a lot of money shortly before the election.
"If this guy prints more money between now and the election, I don't know what y'all would do to him in Iowa, but we - we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous - or treasonous in my opinion.... If they print more money between now and this election, I would suggest [that the Federal Reserve is trying to help President Obama]."
These words were regarded as over the top at the time, but they turned out to be prescient. The Federal Reserve announced on Sept. 13 that it would purchase $40 billion worth of mortgage securities per month until unemployment noticeably improves. John Authers of the Financial Times notes that many might describe the open-ended QE 3 as QE Infinity, and he questions why the Fed would be willing to forsake the part of its mandate that requires low inflation when we are already experiencing the inflationary effects of QE1 and 2. Auther's guest, Gavyn Davies offhandedly remarks that we might ask why Ben Bernanke decided to take this step at this particular time.
Mr. Davies does not provide an answer, but perhaps Governor Perry was on the right track when he suggested that such a move would be evidence that Bernanke favors President Obama. QE Infinity may eventually turn out badly, but if it keeps the economy from tanking for another month or so it may just be enough to get Obama re-elected.