Readers of this blog probably think I’m a broken record on the subject – and I am. So let’s go over it again, shall we?
Printing money and monetizing debt cause inflation. Because inflation is a monetary phenomenon, deficits – while still important – don’t directly affect it. But massive federal deficits create other problems, like soaking up capital that could be used productively in the private sector and burdening us with debts that can only be paid off through the taxes we pay.
And as we’re seeing, there are grave doubts about Chairman Bernanke’s independence from the Obama ’stimulus’ plan and his ability to sop up the trillions in excess cash slopping around the world when the time comes – like now. That’s why commodities are up and the dollar is down. That’s why lots of people are whispering what only Angela Merkel’s had the guts to say publicly: the Fed is Hope ‘n Change’s creature.
With some measure of confidence returning, we may be at the economic inflection point. So it’s time to stop the printing presses and recall the ‘American Recovery and Reinvestment Act’, otherwise known as Porkulus. Scott Grannis of Calafia Beach Pundit (cited by Larry Kudlow on Friday) is saying what a lot of sensible people have been saying – me included: that the economy would right itself without a whole lot of ‘help’ and that whatever the government was likely to do – including massive spending and ‘quantitative easing’ – was likely to do more harm than good in the end.
As Grannis points out, only about $37 billion of the $700 billion Porkulus total has been spent thus far. We could cancel the whole thing, save ourselves a lot of debt and frankly admit that nothing that’s been done has mattered a damn.
