“We shouldn’t be playing around with inflation. It’s not for nothing Reagan called it “as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” The Fed’s pump priming addiction has got our small businesses running scared, and our allies worried. The German finance minister called the Fed’s proposals “clueless.” When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it’s time for Chairman Bernanke to cease and desist. We don’t want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings. 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.”
The most popular piece on the WSJ.com is “Sarah Palin Takes Aim at Fed. ” Given the policy wonkiness of the former Alaskan governor (?!?), one can only wonder who her writers are.
The Journal mentions in passing that Karl Rove questioned her “gravitas.” While Rove seemed to be calling her an intellectual lightweight, the article doesn’t really really question the speech itself — or its reflection of Palin’s belief system.
Matt Phillips of the WSJ’s Marketbeat blog is having none of it, pointing out the 3 major premises of her speech are factually incorrect:
“First off, Reagan’s quote, delivered to a Republican fund raising event in October 1978 — according to the Columbia Book of Quotations — came as inflation was hovering around double-digits.We’ve got a very different situation now, the consumer price index for all items minus food and energy rose 0.8% over the year to September, the lowest 12-month increase since March 1961, the Bureau of Labor Statistics said.
Second, Germany did indeed have a nasty battle with hyper inflation about 90 years ago in the Weimar Republic. But what’s worrying Germany right now is not that their good friends in the U.S.A. will soon be selling bundles of greenbacks by weight, rather it’s that a cheaper dollar is a threat to their own all-important export sector. That’s a legitimate concern for them. But do you really take advice on business strategy from your competitor?
Third, permanently high inflation could indeed erode the value of savings and incomes. But deflation — which is the bigger worry and the reason why the Fed recently announced it is warming up the electronic printing presses — has costs too. It means debts get tougher and tougher to pay off. Last, keep in mind that inflation-scare mongerers have been wrong throughout the entire financial crisis.“
And over at Real Time Economics, another WSJ blog, Sudeep Reddy (author of the Palin piece in the WSJ) points out that Palin’s criticism of inflation is wrong — its been quite low this year at an average annual rate of 0.6%.
But why does it take a blog (or two) to call out the bullshit in her speech? Why doesn’t the Journal point out how “this is factually incorrect, this is wrong, and this is nonsense.?”
Therein lies the Future of media, in one delightful microcosm: The MSM tosses out thin gruel, while a blog — their own blog ! — debunks it a as empty headed nonsense.
Sarah Palin Takes Aim at Fed
WSJ, November 9, 2010
Sarah Palin: Monetary Policy Wonk
MarketBeat November 9, 2010
Sarah Palin’s QE2 Criticism Includes Inflation Hyperbole
Real Time Economics November 8, 2010,