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German Foreign Minister Wolfgang Schaeuble had some of the toughest words for U.S. monetary policy Tuesday, declaring "the American growth model . . ... View Enlarged Image
Monetary Policy: An unlikely assortment of people ranging from Sarah Palin and Paul Volcker to Rep. Paul Ryan and World Bank head Robert Zoellick all believe quantitative easing is a big mistake. So do we.
The discontent has also gone global. The governments of China, Brazil, Japan, Germany and Russia continue to express concern that the Fed's money printing will distort the world economy and lead to a trade war.
Will it? Since the first round of quantitative easing that ended in March â?? during which the Fed printed $1.7 trillion in new money â?? there's no question new economic stresses have emerged between the U.S. and its key trading partners.
Domestically, economic growth has slowed, and we've actually killed more jobs than we've created. Even so, oil has doubled to nearly $90 a barrel, key commodities have soared to record highs and gold has surged past $1,400 â?? all bad inflation omens.
Now, the Fed is embarking on a second round, dubbed QE2, in which it will spend another $600 billion and maybe more. But don't expect it to be any more effective than the first round.
After years of listening to American lectures on laissez-faire, other nations see all this money printing as a transparent attempt at weakening the dollar to boost exports at their expense. It's a strategy that risks trade retaliation and currency wars.
We may be seeing that right now. Witness China's move Tuesday to impose capital controls and the ominous talk from other nations about "protecting" markets. Criticisms are becoming strident.
"The American growth model ... is in a deep crisis," German Finance Minister Wolfgang Schaeuble said in highly critical comments to Der Spiegel. "I seriously doubt that it makes sense to pump unlimited amounts of money into the markets."
We don't often agree with other nations' criticisms of us, but this time they may be right. They worry the cheaper dollar will not only hurt their exports, but will also push up inflation by making anything they buy with dollars â?? oil is but one example â?? more costly.
As serious as those issues are, the impact on the U.S. economy is of far greater concern. The Fed has taken a page from the Obama administration's failed hyper-Keynesianism, believing it can refloat the flagging U.S. economy on a sea of newly-printed money.
It can't. Economists have agreed for years that no nation can devalue its way to prosperity. The Fed seems oblivious that its creation of all this new money risks major trouble in our economy â?? perhaps another market bubble, or broad-based inflation, or a global trade war that drags down the world's economy. Something.
Leadership: After a campaign season filled with blasts against outsourcing, globalization and free trade, President Obama is now touting their benefits â?? in Asia. Will he ever take the lead and tout their benefits here? It's hard not to blame Obama for seemingly suggesting that the ...
Environment: The United Nations wants $100 billion a year in taxes to deal with climate change. Two groups of researchers plan to go on the offensive against global warming "denialists." When will the madness end? The U.N.'s craving for money it hasn't earned is insatiable. So it's no ...
Politics: Due to paperwork delays, the Republican senator-elect from Illinois will not be seated immediately for the lame-duck session, but two Democrats will. The Chicago Way strikes again. The recent election was a damning indictment of government's lack of response to the will of the ...
With a John Boehner speakership fast approaching, I dutifully read up on the man. I learned he is a Midwestern fellow, born (like us all) into the virtuous lower middle class, one of 12 siblings and a man whose early career, in an unironic homage to "The Graduate," was in plastics. What I did not ...
Climate Fraud: As the case for global warming and cap-and-trade has collapsed, so too has the market that was to exploit this manufactured crisis for fun and profit. The climate-change bubble has burst. Lost in the hubbub leading up to the Republican and Tea Party tsunami on Nov. 2 was the ...
Posted By: Light(45) on 11/10/2010 | 4:37 AM ET
Fire the Federal Reserve. We don't need it.
Posted By: Vicki551(1360) on 11/10/2010 | 2:52 AM ET
niteski, I believe you meant 'epithets' (phrase or word used adjectivally to express some quality or attribute of its object) not 'epitaphs' (inscription on a tombstone). The malapropism detracts from your message to loony Loonie. Loonie has been making an absolute fool of him/herself on this site for quite some time spewing gibberish and slander ad nauseum. There aren't many except those of his/her same ilk who pay the slightest attention to anything he/she has to say.
Posted By: niteski(1495) on 11/9/2010 | 9:57 PM ET
Loonie, rather than making a fool of yourself, perhaps you might point out and support why you disagree. Name calling and insults are for those without real arguments. I couldn't tell if you agreed or disagreed, only that you wanted to hurl epitaphs and insults. Of course, that's why you are loony.
Posted By: investorLoonie1(1110) on 11/9/2010 | 8:48 PM ET
So the Fascist Business Daily is now telling us that we should do whatever China, Brazil and Germany tell us to do. Or should we take our financial advise from Sarah Palin? What a joke the FBD is. Previously the Uber Righties wanted us to jump every time Israel said "Jump". Now many other nations are added to this list. Maybe Jim O'Neil and Sarah Palin can jump around together to a Chinese folk song.
Posted By: thebassman(1305) on 11/9/2010 | 7:21 PM ET
It will lead directly to inflation - already started - and longer term higher cost of money. Interest rates WILL go up - a lot. Guess is they will hit double digits easy - maybe as high as Carter era. There are currently millions of ARM mortages out there. With current artificially low rates, resets have gone down. When the rates start rising, as they have to, existing ARM rates will rise. This will lead to another rise in foreclosures. Housing crisis not over, round 2 coming. Look at history
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