Bernanke and Obama Want More Economic Crisis
We predicted here at Capitol Hill Daily that Ben Bernanke wouldn’t taper the Federal Reserve bond buying this month. Yet all the pundits on Wall Street and in the media were fooled. They were fooled because they don’t understand the iron rule:
Don’t listen to what politicians say! Watch what they do.
If you act on the words of politicians (and Ben Bernanke is just another politician), be prepared to experience a head fake. Politicians tell you what you want to hear, not what they actually think or plan to do.
We were confident in making our prediction because we tuned out the D.C. propaganda and watched reality. Reality tells us that unemployment is higher than the numbers Obama’s Labor Department publishes. Inflation is higher than the Consumer Price Index (CPI) they publish. And the economy is much weaker than the Obama cheerleading squad is willing to admit.
If you don’t believe us, then give it the eye test. Drive past nearly any strip mall in America and count the vacant storefronts. Nearly every chain, from Staples (SPLS) to Best Buy(BBY), is shuttering stores. Restaurants are closing. Corporations are hoarding cash and not investing.
The talk of tapering has caused interest rates to spike, and mortgage loan numbers have tanked. New housing is barely off of life support. Car dealers still aren’t selling cars at pre-2008 numbers despite low interest rates and the average age of cars on the road reaching record highs.
The Federal Reserve will never be able to stop Quantitative Easing (QE) until the economy actually recovers. But mark our words… If they don’t stop it soon, they’re running the risk of causing a flash crash in the currency.
The world is already awash in U.S. dollars. China is dumping dollars. Russia is dumping dollars. Japan is weakening the Yen. If the dollar selling gets too great, and I see little reason to hold dollars under this wrong-headed policy, we run the risk of a total crash.
Even without a crash, the QE policy is systematically transferring wealth to the political and banking elites. Inflation is the greatest stealth tax in history.
And That’s Only Half the Story
Obama is playing a very dangerous game with the economy in the hopes of beating the Republicans in the 2014 elections. Here’s how his strategy works.
Instead of trying to come to an agreement on budget authorizations and debt ceiling with the Congress, Obama is playing brinkmanship and trying to create maximum financial insecurity. He believes he can hang a fall economic crisis around the neck of Congress and usher Nancy Pelosi back into the Speaker position.
John Boehner and Eric Cantor are being boxed into giving Obama the crisis he wants. Instead of fighting, they’re bending over backwards to try and forestall a crisis. What they don’t seem to understand is that Obama sees this strategy as weakness. He’s emboldened to create the crisis and therefore exploit Boehner’s weaknesses. He wants a democratic Congress more than he wants an economic recovery.
The best strategy for the Republicans is to actually rise up and fight. They need to remind the world that in the United States, the 14th Amendment to the Constitution makes it impossible to default. Every creditor will be paid. Every bond will be paid. Don’t let Obama get away with talk of default. It’s irresponsible and illegal.
Boehner should look Obama in the eye and say, “If you keep saying America is at risk of default, I’ll move impeachment proceeding in the House so we can replace you with a more responsible and honest president.”
Additionally, Congress has every right to end Obamacare. And they should realize that Obama can whine all he wants about shutdowns. Essential services such as the military and Social Security don’t shut down. It’s Obama’s constituencies of government worker unions, labor unions and bureaucrats that really take it in the chin during a shut down. Instead of retroactively giving people money for the time they didn’t work, this Congress should make Obama’s people pay a price for his irresponsibility.
Your eyes on the Hill, Floyd G. Brown
This commentary originally appeared at CapitalHillDaily.com and is re-published here with permission.
Photo Credit: Standard Compliant