In a speech in Phoenix last November, Governor Palin warned that Obama’s long-discredited Keynesian fiscal policies combined with Ben Bernanke’s ill-conceived efforts to monetize Obama’s debt was causing inflation, particularly in the food and energy sectors. She noted that Bernanke’s plan to print another $600 billion through yet another round of quantitative easing (QE2) would only exacerbate the problem going forward. The so-called experts in Washington and New York who were responsible for these “Jimmy Carteresque” fiscal and monetary schemes couldn’t abide being lectured on their obvious shortcomings by Governor Palin, and Wall Street Journal reporter Sudeep Reddy responded, basically claiming the inflation to which Governor Palin referred was a figment of her imagination. Governor Palin then gave Reddy a well-deserved smackdown via Facebook, resulting in a laughably feeble response from Reddy. Even Reddy’s employers at the Wall Street Journal sided with Palin, and noted that she was “leading the pack” on monetary policy:
Today, with gold in the neighborhood of $1500 per ounce, gasoline flirting with $4 a gallon ($5 in some markets), and skyrocketing food and commodity prices, Governor Palin’s warning over 6 months ago is more prescient than ever. This has not been lost on the New York Sun, and they have an excellent editorial today in which they make the case that Governor Palin saw today’s inflation coming way before the self-anointed financial gurus; those who look down their noses at her (and us) because we dare to question their “brilliance”:
The big question as Chairman Bernanke gets set for his first quarterly press conference is how Sarah Palin was able to figure out sooner than everyone else that the Federal Reserve’s campaign of quantitative easing wouldn’t work. Disappointment in the Fed’s policies is being reported this morning at the top of page one of the New York Times. It reports that “most Americans are not feeling the difference” from the Fed’s “experimental effort to spur a recovery by purchasing vast quantities of federal debt.” It reports that “a broad range of economists say that the disappointing results show the limits of the central bank’s ability to lift the nation from its economic malaise.”
It’s a terrific story, and well-timed, given that on Wednesday Mr. Bernanke will break tradition and meet with the press. It is part of the Fed’s effort to get ahead of what is emerging as a public relations catastrophe, as gasoline is nearing six dollars a gallon at some pumps, the cost of groceries is skyrocketing, and the value of the dollars that Mr. Bernanke’s institution issues as Federal Reserve notes has collapsed to less than a 1,500thof an ounce of gold. Unemployment is still high. Shakespeare couldn’t come up with a better plot. But how in the world did Mrs. Palin, who is supposed to be so thick, manage to figure all this out so far ahead of the New York Times and all the economists it talked to?
She did this back in November in a speech at Phoenix, which the Wall Street Journal, in a laudatory editorial at the time, characterized as zeroing in on the connection between a weak dollar and rising prices for oil and food. “We don’t want temporary, artificial economic growth brought at the expense of permanently higher inflation which will erode the value of our incomes and our savings,” the Journal quoted Mrs. Palin as saying. “We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.” Now here is the New York Times quoting a raft of economists who have reached the conclusion that Mrs. Palin’s warning was right down the line.
No doubt it will be one of the most crowded press conferences in recent memory, and there will be lots to ask about. But one of the questions will be how in tarnation Mrs. Palin figured it out so far ahead of everyone else.
Read the Sun’s entire editorial here. As I said, it’s excellent. We have done multiple posts on this issue in the past, for example see here, here, here, and here.
Update: (h/t CBDenver)Dian L. Chu discusses Bernanke’s monetary follies in a piece today at Business Insider:
The Federal Reserve has lost all credibility on Wall Street, and most of the American public with the absolute refusal to recognize the dire effects on asset prices that QE2 has created. But the refusal is part of the problem. It reinforces the wide spread belief of investors that the Fed is out of touch with reality, and that they sit in their Ivory Tower implementing an exceedingly loose monetary policy, with the stated goal of inflating asset prices.
Update II: Seth Lipsky, Editor of the New York Sun, will be a guest on Jewish Independent Talk Radio later today with Benyamin Korn. Lipsky will be discussing his editorial on Governor Palin’s foresight on monetary policy to which we linked above. The program will air from 5:00 to 6:00 PM and again from 8:00 to 9:00 PM. Listen to it at Newstalk 990 WNTP.