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New York Sun: Sarah Palin for the Fed?; UPDATED





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.

More.

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.

Update III: More from William Jacobsen at Legal Insurrection.



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  • danielvito

    Excellent piece, Doug! Printing money is not the answer as Sarah has stated. We need to control spending. Further, by the actions of the Fed, food & gas prices will continue to go up. A family of 4 who make $50,000/a year will add $3,000 to their energy/food bill. The piece of that $50,000. dollar pie will now account for 21% or $10,500 of that salary over the course of a year. With no end in site.

    Look at your cost for fruit, vegetables etc.. Most people just focus on gas but the cost of staple items are going up crazy. I feel really bad for the poor and elderly on this Easter day. Obama’s policies have made it harder for them to survive.

    • Guest

      Daniel, don’t you know that food and fuel aren’t counted when calculating the rate of inflation. Geesh, get with the program. Inflation isn’t bad at all, according to the government. Why the price of an IPad has gone down and so has the cost of computers and cell phones. Who cares about food and fuel prices? You must be one of those stupid Palinistas to think that these things matter.

      (Of course this is sarcasm, but I feel compelled to point that out for our liberal lurkers.)

      • danielvito

        Rightmom, I love your sense of humor! It’s incredible the free pass Obama gets! I hope you and yours have a wonderful day today!

      • CBDenver

        When a former Goldman Sachs bankster tried that line about the falling rate of iPads, someone in the audience shouted "I can’t eat an iPad". Just shows the disconnect between the banking elite and the rest of us

    • Kjanlady

      Especially with NO cost of living increase to social security since obambuzzle was emaculated.

      • danielvito

        Hey Kjanlady, what’s dangerous w/oblumber is a president has discretion in what gets cut. Knowing him, he’ll cut SS in stead of government waste and blame it somehow on the GOP/Sarah.

  • http://www.facebook.com/people/Pete-Petretich/100002088167892 Pete Petretich

    Run, Sarah, Run!

  • technopeasant

    Where were Donald Trump and Mitt Romney on qualitative easing in Nov 2010?

    I don’t remember. /sarc

    • Guest

      And both are reputed to be hot shot money makers, too!

  • Steven

    What issue has Sarracuda been wrong on or not been ahead of the curve on?? I can’t name one issue. This is why she will defeat Obama and this is why she must be president.

  • CBDenver

    Business Insider has a good article on the Fed and QE2:

    http://www.businessinsider.com/the-fed-must-end-qe2-on-april-27th-2011-4#ixzz1KS15BwtD
    Here they explain the silliness of Bernanke denying the reality of inflation:

    The other area where Ben Bernanke`s stubbornness of acknowledging the effects of QE2 on food and energy prices, i.e., the rise in prices is due strictly to demand reasons, Middle East tensions, and product shortages and in no part to a loose monetary policy which encourages traders to make the following trade:

    1. Loose monetary policy is dollar negative (printing money, currency devaluation, etc).
    2. Commodities like Oil, Gold, Silver, Wheat, Corn, Cotton, Copper are Dollar negative Hedges
    3. Therefore, put on the following trade: Short the dollar, and go long commodities.

    This is the famous inflation trade is has been going on and off for the past 10 years by fund managers around the world. This trade has been in the investing 101 handbook for 50 plus years. And the fact that Ben Bernanke never admits to knowing about these trade dynamics in the marketplace, and how his policy initiate of QE2 actually encourages, facilitates and even mandates that fund managers around the world put on this very trade is beyond a rational explanation.

    • Sapwolf

      What is interesting is that the nature of the problem with the Fed and Bernanke’s seeming inability to understand or get a handle on what is going on is similar to the lack of understanding being shown in other areas of policy and governance where we have people who are supposed to be smart and intelligent in these matters, but they lack the understanding of human nature and what is going on in the minds of Americans.

      It is this elitism that is so out of touch with the reality and the collective thinking of Americans.

      These people lack courage to point out when the system is not working. Bernanke is just whistling past the graveyard.

      He knows the Fed HAS TO BUY all the debt that Obama and the Dems create via their out-of-control spending.

      Guess what? The whole country knows and that is why ‘perceptions’ of the future value of the dollar plummeting along with commodites prices going up ALSO fuels inflation.

      Keep running up HUGE deficits, Fed MUST BUY the debt, therefore more dollars circulating leading to inflation PLUS additional inflation caused by perceptions that it is out of control, which it is. The hedging keeps going on against the dollar.

      My IRA went up another chunk due to commodities. I’m watching it just continue to go up up up. It will keep going up until Sarah is elected. Then the perception will change as the strong dollar Palin begins to lead on the issue.

      The dollar will not begin recovering until Gov. Palin wins the election in Nov. 2012. Why? Perceptions are that she will fight to cut sharply federal spending and the deficit and get us on a course of fiscal sanity. Then when people see the deficit shrink, business confidence start to return, they will stop shorting the dollar and hedging using investments with commodities.

      It is about confidence. Sarah is a strong dollar, low-inflation gal. She does not like to see our standards of living unravel because of the lack of courage of the elite.

      • CBDenver

        Supporters of a weak dollar think that will allow the US to export more because the cost of our products will be relatively cheaper than those of other countries. The problem is since we have offshored our industrial base and limit production of our own natural resources, what are we going to export? Hollywood movies and rap music?

      • Guest

        Simply excellent, Swolf!

  • RedDaveR

    Bernanke has been a disaster. Unfortunately Bush appointed him, and Bernake may very well go down in history as one of Bush’s worst appointments. Alan Greenspan had his share of problems, but Bernanke makes Greenspan look like a genius by comparison.

    There are many things I respect GW Bush for, such as keeping the country safe after 9/11, and he was still far better than the Dem alternatives. But appointing Bernanke is not one of them.

  • c4pfan

    That’s fantastic that there was at least one positvie editorial from that lib paper.

    Too bad most publications won’t mention how Sarah was right from the start about our country’s money policy hurting our economy.

  • Guest

    Man, these establishment types will stop at nothing to keep Sarah from running for President. Now they want her to head the Fed. Sorry, but Sarah is going to be in a position to appoint the head of the Fed, so why would she lower herself to that position. Next, they will be saying that she should be Sec. of State. Heck, they got Hillary out of the country with that one.

    • Betsey_Ross

      These folks in DC are desparate for a leader. On both sides of the aisle. They just can’t bring themselves to think that Sarah is that leader. They are just figuringing out that she is the one to do the leading, but just can’t seem to get there in their minds. She has to view this as a national cry for help.

      • jeffo1

        Those folks in DC as you say are for the most part CORRUPT! They are well aware of her integrity and honesty and that is the last thing they want in their leader. She will first and foremost look to expose the rife corruption and that scares the sh@t out of them.
        They would just as soon keep the status quo.

        SARAH4AMERICA2012

        • Betsey_Ross

          Good point. I always saw that as her job if she became VP She would go after the corruption. The ones that are not are also looking for someone to help them fight. The Tea Party is on the case. I think the country as a whole is looking for leadership. That’s why Trump is gaining traction right now. I don’t think he is a good pollitical leader, and time will bear that out, he sure does not let political correctness keep him quiet.

          • jeffo1

            You are so right…I am now starting to fully understand the nexus of the attack that started with her VP selection. They went after her with a vengeance knowing full well she would as VP expose them for what they are. This is first and foremost what they are most afraid of. An honest politician with integrity is their worst fear.

            GET EM CUDA!

  • http://www.solitudebooks.com/ Dan C

    Sarah will replace the current FED Chairman when his time is up and if she is in office. John Taylor of Stanford or Thomas Hoenig would be much better choices as they would not be intent on debasing our currency. Hoenig is there now and has been a dissenting voice on all the QE.

  • RKflorida

    What I find amazing is they can’t figure out how Sarah knew so soon that printing a bunch of money was a "Bad" decision. Or, that stopping drilling is a "Bad" decision. Are these people from another planet?

  • Guest

    The Wall Street Journal’s Paul Gigot and James Freeman discuss Gov. Palin’s "consistent message" on financial matters on "Opinion Journal Live." Gigot says the former Alaska governor "shows a very sophisticated understanding of monetary policy" and "she’s leading the pack" of potential 2012 presidential contenders on the issue.

    http://online.wsj.com/video/opinion-journal-palin-vs-bernanke/6A8B3973-6069-464E-B48B-4D4564C96DE5.html?mod=WSJ_article_related

  • section9

    The headline is, of course, in jest.

    What the people at The Sun are getting at is that Palin was deeply prescient in applying conservative principles invoving Sound Money and restraint in spending.

    She deserves congratulations.

  • MarkRNY

    Wish there could be a permanent link on C4P to this article.

    I’m sending it to Rush and Levin for what it’s worth. Maybe I’ll throw in Cavuto (a Christie guy I think)–it definately goes to BOR! He won’t understand what they’re talking about, but he might pick up that it’s pro-Sarah. Make him lose more hair (along with ratings).

    • Guest

      Please! BOR is truly an idiot (though he thinks he’s brilliant). Don’t send him stuff that he doesn’t understand. All he’ll do is confuse the heck out of the public when he talks about it and make Sarah sound like she’s the idiot.

      • MarkRNY

        You’re right. I’ll send it to Krauthammer and Will.

        • Guest

          LOL!!! You’ve just sent garlic to Krauthammer!!

  • http://teamsarah.ning.com/profile/HymanRoth Hyman Roth

    Bernanke is Moe Green.

  • ellebb

    When you begin to realize that this administration actually WANTS to ruing our economy, I guess they are doing a heck of a job. I’m thinking they really do want to destroy U.S. – no other explanation makes sense.

  • PCR1

    ..".But how in the world did Mrs.Palin, who is suposed 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?".

    Answer:

    Because this Mrs.Palin, Governor Palin to us, is a natural born genius, and she has more brains – and more guts by far – than any of those economists, Ben Bernanke and Tim Geithner included, those fiction writers at the New York Times and the Washington Post, and all those fuddy duddies in DC, and those frauds and losers who think that they’ed like to be president after 2012, and the sooner that she is at the helm of this country the better it will be for all of us.

    One other thing, I remember something that Ross Perot had said, that he had never heard of a rich economist.

    He got that one right, and we know why.

  • tomlyn

    Great video we need to spread the word and video to everyone we can.

  • Guest

    The problem for the intelligentsia is that they think Palin, a very bright woman, is a fool because they believe what they read in the press. Nobody knows the full extent of Palin’s knowledge on economics because interviewers seldom want to ask her weighty questions (because they believe the press!). Sarah did say that she did economics classes at uni; she did do macroeconomics (said her grade wasn’t hot). Moreover, Sarah’s time as governor, during which she dealt with complex fiscal issues, served her well enough to read and analyze the prevailing economic trends and arrive at the correct conclusion.

    The problem for Obama is that his people either don’t have practical, real world experience or they are so ideological that it is impossible for them to extrapolate from the theoretical structures of Keynesianism to its application in a real world setting. Perhaps, in their minds, Keynesianism MUST work no matter that evidence shows it can’t. A huge blind spot.

    • Tomservo88

      Perhaps the intelligentsia would find out how smart Palin is, if she ever dared to have a bona fide press conference. Until then, no one knows what she does or doesn’t know- we do not know who wrote the WSJ article or her speech.

      • Guest

        Which part of your head do you want me to go upside of?

        Go do your research on Palin and interviews before you open your mouth and show people you’re an ignoramus.

        Here’s a tip: when you don’t know something, shut your mouth and give people a chance to like you.

      • Kay

        The intelligensia is too lazy to look up her press conferences. http://www.palintv.com/category/press-conferences/

      • Kay

        Who writes Romney’s articles? When will he hold a press conference? Who writes Obama’s speeches?

  • http://pulse.yahoo.com/_377ED42ISJIFXSCTSQSLO25U4Y Ric

    Sarah is certainly on top of this and is unafraid to state her position.
    Romney and Trump are not on her level of overall big picture understanding of economics – Trump is a master manipulator and Real Estate deal maker – rather limited – Romney has some business organizational strengths and some political deal making, but again rather limited.

    Sarah has a lot of experience in energy production, distribution, and regulation… AND the effects such a major sector as energy has on the overall world economy.

    No one else in the GOP field has anywhere near her experience –

    I would not automatically trust any academic (from ANYWHERE) to understand how all the pieces fit together and affect one another – academics study very small parts of the entire system, but not usually enough to come to a rational conclusion of understanding of the overall system. A few academics near the ends of their lives sometimes show signs of ‘seeing the big picture’.

    I have wondered since the ’08 bailout, why the political class was behaving so irrationally. At first I thought they may have seen something that I did not. Later, I thought they were attempting to destroy the economy. Currently, I am not sure if they are not just very ignorant.

    Clearly, we (the USA and the free world) need a leader with exceptional reasoning abilities and a broad understanding of how systems work… and the only one I see capable of this is our Sarah.

    Happy Easter and G-d bless.

    • Guest

      Exactly! That’s the beauty of Sarah’s experience. We have not had another presidential candidate who comes with the diversity and complexity of her knowledge and experience. Yeah, yeah, the Dems always talk about their guy being bright, but that is always book knowledge. As my grandmother used to say, these guys know book but they don’t know chapter. Sarah is a cut above the rest of the other governors because she consistently applies Conservative philosophy and practical experience to real world problems; then, unlike the Liberals, she actually learns from experience and adapts her problem solving model.

  • Quiet_Righty

    To the more economically literate out there–what will it take to make the U.S. dollar regain value that was lost due to the printing of money?

    • John_Frank

      - Get the Federal Reserve to stops its monetary policy of quantitative easing and return to monetary policies that support a stable dollar.

      - As to fiscal policy, the Republicans in the House say No to raising the Debt Limit. Force the administration to live within its means and prioritize spending in accordance with the Constitution. Within these constraints, in addition to maintaining a strong defense, if possible: support retraining of workers, especially those who are older, help reform education through a voucher system, help rebuild America’s infrastructure, support basic research and development.

      - As to economic policy reform the tax code and entitlements. Go after fraud, waste and abuse. Stop corporate welfare. Put in place policies that make America the best place in the word to do business without picking winners and losers. Remove the restrictions on exploiting America’s natural resources, providing the exploitation is done in an environmentally safe fashion. Fix legal immigration, including allowing more skilled and technical workers to come to America. Secure the southern border. Address the issue of illegal immigrants.

      Just some suggestions.

      • Quiet_Righty

        Thanks. I hope you are correct, that devaluation of the dollar can be reversed via sensible economic and fiscal policies

    • CBDenver

      Here is a good article that explains well the concept of the weak versus strong dollar: http://www.gold-eagle.com/gold_digest_04/stott101404.html

      "A weak dollar, is weak in comparison to other paper currencies, and a strong one is also, compared to other currencies. If everything one buys is produced and grown in America, a weak dollar has no effect on the price of goods purchased, except for inflation. … Unfortunately, just about everything we buy is produced abroad. Hence, a weak international dollar means a lot."

      "Weak dollars have a very dark side to them, and especially when our deficit is so large. We have to sell our debt to stay afloat, because our government spends over a billion dollars a day more than is taken in by taxes. We "sell" our debt to whoever will buy it, and pay interest to the buyers or borrowers. If the dollar continues its slide, and interest is low, foreign nations won’t buy our debt."

      I believe the dollar crisis will result in the end of globalization and the use of the US dollar as a reserve currency. The problem for the US is (1) we owe foreign nations who have bought our debt and (2) we depend on foreign nations for raw materials like oil and manufactured products. .

      Problem#1 means foreigners will start to cash in their T-bills and we will have trouble trying to refinance our massive debt. Problem #2 means we will have a hard time purchasing goods with a weak dollar. The only solutions are that we must get our debt and deficits under control and we must rebuild our industrial base so we can start manufacturing goods for our own use. Failure to do those things means a drastically lower standard of living for all Americans.

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