Printing Money to Get Obama Re-Elected
FED Chairman Ben Bernanke, realizing that the country is getting fed up with the Fed, has begun speaking out on his own behalf. He might be better off if he remained quiet. His denials sound like the protestations of a guilty man.
At a meeting in Indianapolis, Bernanke declared several thing including a claim that he did not expect the country to go into economic recession and that he was not using “QE3” to influence political debate or the outcome of the election.
How believable is Bernanke?
According to Forbes, “Using monetary policy to influence the political debate ‘would be highly inappropriate’ and ‘likely […] ineffective,’ explained the Chairman.”
Funny, the economic reporters at Forbes don’t think it would be ineffective. They think it is very effective. Staff writer, Robert Lenzer recently published a piece with the headline, “Obama Will Owe His 2nd Term In Part to Bernanke’s QE.” Lenzer called the pro-Obama results “unintended consequences” but he has to be a mind reader to make such an assertion. All he can say on the basis of the evidence is that Bernanke has hidden the pain of the real economy from the voters, making Obama look better than he would look otherwise.
“Bernanke’s stubborn and persistent commitment to piling monetary reserves on monetary reserves has driven asset prices higher, made Americans more wealthy on paper, and reassured the voters in key contested states.”
How? By keeping interest rates practically less than zero, the housing market has not died. In fact it seems like it might be turning around. Also, Bernanke’s QEs have kept the nominal value of stocks higher than they should be in this atrocious economy.
“Your 401K, your pension assets, your residence, have increased in value since the dire fall of 2008. This happened on Obama’s watch despite the rate of unemployment, despite the 45 million people on food stamps, despite the very meager rebound in economic growth. The ‘wealth effect’ could continue in fits and starts though election day – giving comfort to the voters.”
So here we have a government monopoly affecting the outcome of an election. Effectively the Administration is voting for itself.
But this growth is illusionary — based on money-printing and price controls of interest rates. It isn’t the real economy. And many people know it. As Mish at Global Economic Trends Analysis has reported,
“The quarterly survey of CEO expectations looking six months out shows that while CEOs are still positive in regards to capital spending and sales, the recent plunge was the third largest plunge in expectations in history.”
They see what is ahead, and they know it will be bad. And Bernanke is doing all he can to make it worse.