Dangerous Dollars: America’s ‘QEII’: Estadao, Brazil

November 10, 2010 · Posted in The Capitol · Comment 

Can the Federal Reserve revive the U.S. economy with a second round of ‘quantitative easing’, also known as QEII? In essence, this means injecting $ 600 billion that never existed before into the U.S. and global economy in $ 75 billion monthly increments.

Reflecting the growing interconnectedness of the global economy, two of the articles we’ve posted on QEII demonstrate growing international discontent with the move, which may benefit the U.S. economy, but will undercut the currencies and economies of other nations.

According to the first article, an editorial from Brazil’s Estadao, the strategy damages countries like Brazil by boosting the value of its currency, making Brazilian products more expensive and U.S. products cheaper.

The Estadao editorial says in part:

The decision by the Federal Reserve (FED, the U.S. central bank) to release another $ 600 billion into circulation by the middle of next year could be a very expensive proposition for Brazil. The plan is to issue approximately $ 75 billion per month in one more push to revive the U.S. economy, the activity of which remains at a low ebb and with unemployment above 9 percent. In exchange for this money, the FED will buy federal bonds held by the public. Dollars will continue flooding the markets and force a revaluation of Brazil’s real and other currencies. Brazilian manufacturers will have greater difficulty not only with exports, but also with competing on the domestic market, because their currency is already one of the most overvalued in the world. The Chinese will continue to take advantage of a majority of their competitors because they’ll find a way to keep the yuan undervalued, but perhaps a little less than before just to show some good will.

Everybody roots for the recovery of the American economy, the most important in the world, but not everyone applauds U.S. monetary policy because of its effects on the global exchange market. In practice, the U.S. exports its crisis to the rest of the world, rather than contributing to the overall global recovery.

The second editorial I’d like to bring to your attention is an editorial from the state-run China Daily, headlined America’s Money Printing is Threat to Global Recovery. The editorial says in part:

The FED’s move to print more money may help boost employment and maintain a low inflation rate domestically, but it will bring a flood of liquidity to the global economy, especially emerging economies, driving inflation expectations to dangerous levels.

If U.S. policymakers turn a deaf ear to international criticism over its latest attempt to stimulate its economy, they risk undermining efforts in other countries to normalize their own monetary and fiscal policies and achieve a lasting recovery.

Even worse, the phenomenal inflationary impact that QE2 has already exerted on global markets could be just the tip of the iceberg. There will undoubtedly be unforeseen consequences to printing such a large amount of U.S. dollars, the key international reserve currency widely used in international commodity trading, capital circulation and financial transactions.

The international community must make it an issue of serious discussion at the G20 summit in South Korea later this week. It is necessary to drive home the message that neither one country or the world as a whole can re-inflate its way out of a crisis as wide and deep as the one we are all still suffering from.

READ MORE AT WORLDMEETS.US, your most trusted translator and aggregator of foreign news and views about our nation.


The Moderate Voice

Dangerous Dollars: America’s ‘QEII’: Estadao, Brazil

November 10, 2010 · Posted in The Capitol · Comment 

Can the Federal Reserve revive the U.S. economy with a second round of ‘quantitative easing’, also known as QEII? In essence, this means injecting $ 600 billion that never existed before into the U.S. and global economy in $ 75 billion monthly increments.

Reflecting the growing interconnectedness of the global economy, two of the articles we’ve posted on QEII demonstrate growing international discontent with the move, which may benefit the U.S. economy, but will undercut the currencies and economies of other nations.

According to the first article, an editorial from Brazil’s Estadao, the strategy damages countries like Brazil by boosting the value of its currency, making Brazilian products more expensive and U.S. products cheaper.

The Estadao editorial says in part:

The decision by the Federal Reserve (FED, the U.S. central bank) to release another $ 600 billion into circulation by the middle of next year could be a very expensive proposition for Brazil. The plan is to issue approximately $ 75 billion per month in one more push to revive the U.S. economy, the activity of which remains at a low ebb and with unemployment above 9 percent. In exchange for this money, the FED will buy federal bonds held by the public. Dollars will continue flooding the markets and force a revaluation of Brazil’s real and other currencies. Brazilian manufacturers will have greater difficulty not only with exports, but also with competing on the domestic market, because their currency is already one of the most overvalued in the world. The Chinese will continue to take advantage of a majority of their competitors because they’ll find a way to keep the yuan undervalued, but perhaps a little less than before just to show some good will.

Everybody roots for the recovery of the American economy, the most important in the world, but not everyone applauds U.S. monetary policy because of its effects on the global exchange market. In practice, the U.S. exports its crisis to the rest of the world, rather than contributing to the overall global recovery.

The second editorial I’d like to bring to your attention is an editorial from the state-run China Daily, headlined America’s Money Printing is Threat to Global Recovery. The editorial says in part:

The FED’s move to print more money may help boost employment and maintain a low inflation rate domestically, but it will bring a flood of liquidity to the global economy, especially emerging economies, driving inflation expectations to dangerous levels.

If U.S. policymakers turn a deaf ear to international criticism over its latest attempt to stimulate its economy, they risk undermining efforts in other countries to normalize their own monetary and fiscal policies and achieve a lasting recovery.

Even worse, the phenomenal inflationary impact that QE2 has already exerted on global markets could be just the tip of the iceberg. There will undoubtedly be unforeseen consequences to printing such a large amount of U.S. dollars, the key international reserve currency widely used in international commodity trading, capital circulation and financial transactions.

The international community must make it an issue of serious discussion at the G20 summit in South Korea later this week. It is necessary to drive home the message that neither one country or the world as a whole can re-inflate its way out of a crisis as wide and deep as the one we are all still suffering from.

READ MORE AT WORLDMEETS.US, your most trusted translator and aggregator of foreign news and views about our nation.


The Moderate Voice

Dangerous Dollars: America’s ‘QEII’: Estadao, Brazil

November 10, 2010 · Posted in The Capitol · Comment 

Can the Federal Reserve revive the U.S. economy with a second round of ‘quantitative easing’, also known as QEII? In essence, this means injecting $ 600 billion that never existed before into the U.S. and global economy in $ 75 billion monthly increments.

Reflecting the growing interconnectedness of the global economy, two of the articles we’ve posted on QEII demonstrate growing international discontent with the move, which may benefit the U.S. economy, but will undercut the currencies and economies of other nations.

According to the first article, an editorial from Brazil’s Estadao, the strategy damages countries like Brazil by boosting the value of its currency, making Brazilian products more expensive and U.S. products cheaper.

The Estadao editorial says in part:

The decision by the Federal Reserve (FED, the U.S. central bank) to release another $ 600 billion into circulation by the middle of next year could be a very expensive proposition for Brazil. The plan is to issue approximately $ 75 billion per month in one more push to revive the U.S. economy, the activity of which remains at a low ebb and with unemployment above 9 percent. In exchange for this money, the FED will buy federal bonds held by the public. Dollars will continue flooding the markets and force a revaluation of Brazil’s real and other currencies. Brazilian manufacturers will have greater difficulty not only with exports, but also with competing on the domestic market, because their currency is already one of the most overvalued in the world. The Chinese will continue to take advantage of a majority of their competitors because they’ll find a way to keep the yuan undervalued, but perhaps a little less than before just to show some good will.

Everybody roots for the recovery of the American economy, the most important in the world, but not everyone applauds U.S. monetary policy because of its effects on the global exchange market. In practice, the U.S. exports its crisis to the rest of the world, rather than contributing to the overall global recovery.

The second editorial I’d like to bring to your attention is an editorial from the state-run China Daily, headlined America’s Money Printing is Threat to Global Recovery. The editorial says in part:

The FED’s move to print more money may help boost employment and maintain a low inflation rate domestically, but it will bring a flood of liquidity to the global economy, especially emerging economies, driving inflation expectations to dangerous levels.

If U.S. policymakers turn a deaf ear to international criticism over its latest attempt to stimulate its economy, they risk undermining efforts in other countries to normalize their own monetary and fiscal policies and achieve a lasting recovery.

Even worse, the phenomenal inflationary impact that QE2 has already exerted on global markets could be just the tip of the iceberg. There will undoubtedly be unforeseen consequences to printing such a large amount of U.S. dollars, the key international reserve currency widely used in international commodity trading, capital circulation and financial transactions.

The international community must make it an issue of serious discussion at the G20 summit in South Korea later this week. It is necessary to drive home the message that neither one country or the world as a whole can re-inflate its way out of a crisis as wide and deep as the one we are all still suffering from.

READ MORE AT WORLDMEETS.US, your most trusted translator and aggregator of foreign news and views about our nation.


The Moderate Voice

Dangerous Dollars: America’s ‘QEII’: Estadao, Brazil

November 10, 2010 · Posted in The Capitol · Comment 

Can the Federal Reserve revive the U.S. economy with a second round of ‘quantitative easing’, also known as QEII? In essence, this means injecting $ 600 billion that never existed before into the U.S. and global economy in $ 75 billion monthly increments.

Reflecting the growing interconnectedness of the global economy, two of the articles we’ve posted on QEII demonstrate growing international discontent with the move, which may benefit the U.S. economy, but will undercut the currencies and economies of other nations.

According to the first article, an editorial from Brazil’s Estadao, the strategy damages countries like Brazil by boosting the value of its currency, making Brazilian products more expensive and U.S. products cheaper.

The Estadao editorial says in part:

The decision by the Federal Reserve (FED, the U.S. central bank) to release another $ 600 billion into circulation by the middle of next year could be a very expensive proposition for Brazil. The plan is to issue approximately $ 75 billion per month in one more push to revive the U.S. economy, the activity of which remains at a low ebb and with unemployment above 9 percent. In exchange for this money, the FED will buy federal bonds held by the public. Dollars will continue flooding the markets and force a revaluation of Brazil’s real and other currencies. Brazilian manufacturers will have greater difficulty not only with exports, but also with competing on the domestic market, because their currency is already one of the most overvalued in the world. The Chinese will continue to take advantage of a majority of their competitors because they’ll find a way to keep the yuan undervalued, but perhaps a little less than before just to show some good will.

Everybody roots for the recovery of the American economy, the most important in the world, but not everyone applauds U.S. monetary policy because of its effects on the global exchange market. In practice, the U.S. exports its crisis to the rest of the world, rather than contributing to the overall global recovery.

The second editorial I’d like to bring to your attention is an editorial from the state-run China Daily, headlined America’s Money Printing is Threat to Global Recovery. The editorial says in part:

The FED’s move to print more money may help boost employment and maintain a low inflation rate domestically, but it will bring a flood of liquidity to the global economy, especially emerging economies, driving inflation expectations to dangerous levels.

If U.S. policymakers turn a deaf ear to international criticism over its latest attempt to stimulate its economy, they risk undermining efforts in other countries to normalize their own monetary and fiscal policies and achieve a lasting recovery.

Even worse, the phenomenal inflationary impact that QE2 has already exerted on global markets could be just the tip of the iceberg. There will undoubtedly be unforeseen consequences to printing such a large amount of U.S. dollars, the key international reserve currency widely used in international commodity trading, capital circulation and financial transactions.

The international community must make it an issue of serious discussion at the G20 summit in South Korea later this week. It is necessary to drive home the message that neither one country or the world as a whole can re-inflate its way out of a crisis as wide and deep as the one we are all still suffering from.

READ MORE AT WORLDMEETS.US, your most trusted translator and aggregator of foreign news and views about our nation.


The Moderate Voice

U.N. Security Council Expansion is Not in America’s Interests

November 9, 2010 · Posted in The Capitol · Comment 
style=”float: right; margin-bottom: 10px; margin-left: 10px;”> class=”alignnone size-full wp-image-23830″ title=”United Nations Security Council” src=”http://blog.heritage.org/wp-content/uploads/UN-Sec-Council-100113.jpg” alt=”United Nations Security Council” width=”370″ height=”240″ />

President Barack Obama made waves during his trip to India by telling the Indian parliament that “in the years ahead, I look forward to a reformed United Nations Security Council that includes India as a permanent member.” This simple, vague statement has become the headline for his entire visit with U.S. and Indian media declaring that “ href=”http://www.washingtonpost.com/wp-dyn/content/article/2010/11/08/AR2010110800495.html”>Obama supports adding India as a permanent member of U.N. Security Council” and “ href=”http://abcnews.go.com/US/wireStory?id=12081007″>Obama Backs India Bid for UN Security Council Seat” and “ href=”http://www.hindustantimes.com/Obama-backs-Security-Council-bid-slams-Pak/Article1-623524.aspx”>Obama backs UNSC bid, slams Pakistan.”

The statement made news because until the speech, the U.S. had only endorsed Japan as a new permanent member of the UN Security Council, albeit within the context of modest expansion. The inclusion of India among the countries that the U.S. is willing to see on an expanded Security Council is understandably celebrated in India. id=”more-46345″>

But when you look at President Obama’s remark, it is not entirely clear that the U.S. would actually support a proposal for India to gain permanent member status on the Council if presented with the opportunity. href=”http://abcnews.go.com/US/wireStory?id=12081007″>ABC news indicated that “U.S. is backing India’s membership only in the context of unspecified reforms to the council that could take years to bring about.” The President did not say what those reforms were, if it would accept an expansion proposal that went beyond India and Japan, or whether the U.S. would support giving a new permanent member the veto over Security Council resolution like that possessed by the current five permanent Security Council members.

All of these issues are critical. href=”http://www.un.int/india/india_and_the_un_unreform.html”>India has been crystal clear in its position:

The composition of the Security Council needs to change to reflect contemporary realities of the twenty-first century. This implies, in the first instance, increase in the membership of the Security Council in both the permanent and non-permanent categories. Second, new permanent members should have the same responsibilities and obligations as the current permanent members. Third, veto should be extended to new permanent members. This is predicated on the logical and principled position that there can be no discrimination within the same category of members of the Security Council.

Based on U.S. policy under previous administrations, India’s stance on U.N. Security Council expansion is unacceptable. The U.S. can’t simply approve of permanent seats for Japan and India. Any reform of the U.N. Security Council opens the door for a larger expansion. Under the Bush Administration, the href=”http://www.upi.com/Business_News/Security-Industry/2005/06/23/US-spells-out-UN-reforms-sought/UPI-91551119560797″>U.S. indicated that it was prepared to accept “two or so new permanent members and two or three additional nonpermanent seats, allocated by region, to expand the Council to 19 or 20.” This is starkly at odds with the href=”http://www.heritage.org/Research/Reports/2005/08/UN-Security-Council-Expansion-Is-Not-in-the-US-Interest”>proposals being discussed in recent years at the U.N. which involve an expansion of the Council by 10 or 11 seats, including as many as 6 new permanent members.

This reluctance is based on experience. The Security Council is by no means perfect. It is subject to delay and indecisiveness. Getting resolutions through the U.N. Security Council involves an enormous amount of effort unless they merely continue the status quo or are without serious content.

However, a larger Council would not solve these problems. On the contrary, it would further undermine the Council’s ability to act decisively as timely action would fall victim to political impasse, conflicting interests, or debate among nations that have little to contribute to the Council’s ultimate responsibility—enforcement of international peace and security. The potential for gridlock increases even more if new permanent member possess the veto.

The Obama administration, after fighting for months to get a resolution on Iran through the Council, understands this and would also likely not support a large expansion of the Council. However imperfect, the current composition of the Council is infinitely preferable to ill-considered expansion that will surely make the Security Council less relevant. While the Security Council is not the only source of legitimacy for international action, it can often be a preferred route. The U.S. gains little from a weakened Council.

Therefore, the announcement in India is likely a cynical diplomatic game. President Obama most likely is calculating that the short-term political goodwill generated from the statement is a freebee that he will never be expected to deliver on. He’s counting on the political rivalries surrounding various countries ambitions for a permanent seat on the Security Council (or keeping their rivals from getting one) to scuttle any serious proposal from being acted on under his Presidency.

Granted, it could well work out this way. Security Council expansion has been under discussion for decades with little to show for it. As an amendment to the U.N. Charter, a proposal to expand the Security Council must clear two key hurdles. First, it must be supported by a two-thirds majority of the General Assembly, or 128 nations. Second, it must be ratified by two-thirds of the General Assembly and all five current permanent members of the Security Council. Wrangling among the member states has sidetracked it repeatedly. Indeed, China’s opposition is Japan’s biggest obstacle to a permanent Security Council seat, and could well be India’s.

But if a proposal is actually put to vote in the General Assembly, however, the U.S. faces a quandary. The Council cannot be expanded without U.S. approval and India would now expect U.S. to support a proposal granting it a permanent seat. The U.S. faces the difficult prospect of supporting a proposal—even if it is deemed against U.S. interests—or harming relations with India which would interpret a no vote by the U.S. as a broken promise.

And for what? The relationship between India and the U.S. is moving forward on a number of sound areas based on mutual interest. India would have been disappointed if President Obama had not made his statement. But it would have been consistent with past policy and would have been quickly forgotten. Why risk damaging a burgeoning relationship over an applause line?

The Foundry: Conservative Policy News.

The Disconcerting Swings of America’s Political Pendulum: Gazata, Russia

November 8, 2010 · Posted in The Capitol · Comment 

Our ’round the world survey of global reaction to the new U.S. political landscape continues with this article from Russia’s Gazeta. Columnist Fyodor Lukyanov offers a detailed analysis of why such things as the Tea Party and wild swings in the political climate occur in the United States – and what the foreign policy ramifications might be, particularly for Russia and the New Start treaty that was recently signed by Barack Obama and Dmitry Medvedev.

For Gazeta, Fyodor Lukyanov writes in part:

Such a convincing defeat of Democrats wasn’t expected even a few months ago, but the reasons are explainable. Barack Obama has collided with the other side of his incredible popularity: the depth of frustration is directly proportional to the scale of expectations. Two years ago, commentators unanimously warned that no politician is capable of satisfying the expectations that U.S. society attached to the ascension of its first non-White presidential nominee. But aside from the objective trap within which the man who promised to change America has found himself, there is also a personal factor. Even the lips of the most staunch Obama supporters are enunciating criticism of his failure to intelligibly explain to the nation what he’s doing and why.

There is another aspect of the change: the sharp polarization of American society that began under Bush, has worsened under Obama. The country is at a crossroads in its development – economically, politically and socially. At the same time, different social groups have diametrically opposing ideas about what to do. The “Tea party” movement, which emerged at the start of the midterm campaign – is the flip side of the Obama phenomenon. Two years ago, people fatally disappointed in their leaders voted for a candidate that was different from the other Washington insiders – even visually. Now their sympathies have swung in the opposite direction toward every kind of radical conservative coalition, many of which hold differing views, and which are cemented exclusively by antipathy toward the status quo.

On the whole, this increases the volatility of American politics and promised new sharp turns – disappointment in “simple” conservative prescriptions may come as fast as it did for Obama’s “complicated” ones.

On the foreign policy front, positive changes are not to be expected. The “free hand” period for the administration is over. It will have to look to its opponents, who take a tough (and in the worst case, obstructionist) position on most issues. The list of people who will determine the foreign policy agenda in Congress gives a sense of the likely mood. … Playing a leading role in the upper house are Jon Kyl, who says he is inclined to ratify the New START treaty only if a whole list of additional conditions are met, Jim DeMint, a categorical opponent of New START, and John McCain, whose views on Moscow are well known. The likely majority leader in the House of Representatives is Eric Cantor – a well-known advocate of Israel and, accordingly, a representative of the most rigid wing in respect to countries that have ties to Iran, Syria, etc. A number of other figures in the Congressional leadership are associated with the traditional “power” line that adheres to the notion of non-negotiable American dominance.

READ ON AT WORLDMEETS.US, your most trusted translator and aggregator of foreign news and views about our nation.


The Moderate Voice

Elections Can’t Cure America’s ‘Disease’: The Beijing Times, People’s Republic of China

November 7, 2010 · Posted in The Capitol · Comment 

So what’s the view of Beijing to the recent 2010 midterms? Not only do the U.S. elections appear unlikely to encourage China to set aside dictatorship for pluralism, according to this article by Mao Yingying for China’s state-run Beijing Times, America itself would be better off reconsidering how its ’so-called democracy’ should run.

For the Beijing Times, Mao Yingying writes in part:

Americans appear disappointed with more than Obama, for despite the bad report card for Obama and the Democratic Party and Republican success at harnessing the “anger vote,” Republicans don’t seem to know or want to know how to resolve America’s great problems, like how to reduce the ever-increasing unemployment rate. In the words of a certain Republican leader [Mitch McConnell], the most important task for his party in the next two years is to “ensure Mr. Obama is a one-term president.”

Defeating Obama and the Democratic Party may be a victory for Republicans, but one party’s victory over another has precious little meaning to ordinary American people. Long and intense disputes over trivial matters between the two parties will deliver none of the things that people want. On the contrary, when the change in power is reduced to two election machines attacking one another, so-called democracy becomes a farce – and one that demands the spending of a lot of dollars.

American scholars have pointed out that “replacing a few chess pieces on the board” (after the midterm elections) will bring very little change to the United States. In fact, “replacing the most important piece on the board” (presidential election) is unlikely to bring much change, either. Because the rules of the game haven’t changed, i.e.: “whoever Wall Street money flows toward, wins” and “behind the verbal wars are a mountain of advertising and packaging fees.” Lying to the people and writing “blank checks,” dumping dirty water over opponents, and finding “scapegoats” and “punching bags” in the international community haven’t changed either. Under such rules, the elections were quite lively, but the “show,” rather than reflecting reality, shows that the American disease continues to spread.

The reality is that amidst an economic and financial crisis, the U.S. doesn’t have a superior or credible political system for improving the economy or people’s livelihoods. Expecting America’s self-styled democracy to reform itself to overcome its economic difficulties can only be called a fantasy.

READ ON AT WORLDMEETS.US, your most trusted translator and aggregator of foreign news and views about our nation.


The Moderate Voice

Fed Gamble Risks America’s Greatest Asset

November 4, 2010 · Posted in The Capitol · Comment 

From The Daily Telegraph:

printingpress

The fresh $ 600bn (£372bn) infusion of quantitative easing announced on Wednesday may or may not provide a lift for beleaguered domestic demand – both Goldman Sachs and HSBC have said much more is needed to escape a real or imagined liquidity trap – but one thing it certainly does do is further debauch the currency. Never before has dollar hegemony been so much under threat.

By flooding the world economy with yet more freshly minted dollars, America further undermines faith in the greenback as an internationally reliable store of value and is thereby squandering an economic and geo-political asset of huge importance to the nation’s history.

The dollar’s reserve currency status means that America can borrow at will in its own currency from the rest of the world, and at favourable rates to boot. This privilege is being recklessly thrown away.

Every time the Fed prints more dollars to fight the domestic recession, it further devalues that debt. The lenders are understandably getting restless.

As is now becoming steadily more apparent, dollar hegemony was a major underlying cause of the crisis, for it allowed America to go on an unrestrained borrowing binge; the developing world is ever more minded to think its demise part of the solution.

The Fed is taking a massive gamble with America’s long term future by blindly pursuing further monetary stimulus; it may take time, but the dollar’s all powerful reign on the world stage is drawing to a close.

And they wonder why US business remains in a state of paralysed shock. Policy seems hell bent on destruction.

In Obama’s defence, it is usually said that the economic legacy he inherited was so poisonous that it was never likely to be easily fixed, and there is no doubt much truth in this contention.

But rather than focusing like a lazer on the economic catastrophe unfolding before him, Obama instead embarked on a wildly ambitious, disruptive and divisive legislative programme that has succeeded only in heaping further uncertainty on already damaged economic confidence.

If ever more mountainous public debt were not deterrent enough to investment and trade, the clutter of futile reform emerging from the White House would have frightened even the most loyal of American investors into inaction.

Stripped of his political authority, Mr Obama can only look hopelessly on as the newly enthused “Reds” suck the lifeblood out of health and financial reform. Hard won at near fatal political and economic cost, much of the president’s legislative programme may end up neutered to death.

Read the whole thing here.


Big Government

Fed Gamble Risks America’s Greatest Asset

November 4, 2010 · Posted in The Capitol · Comment 

From The Daily Telegraph:

printingpress

The fresh $ 600bn (£372bn) infusion of quantitative easing announced on Wednesday may or may not provide a lift for beleaguered domestic demand – both Goldman Sachs and HSBC have said much more is needed to escape a real or imagined liquidity trap – but one thing it certainly does do is further debauch the currency. Never before has dollar hegemony been so much under threat.

By flooding the world economy with yet more freshly minted dollars, America further undermines faith in the greenback as an internationally reliable store of value and is thereby squandering an economic and geo-political asset of huge importance to the nation’s history.

The dollar’s reserve currency status means that America can borrow at will in its own currency from the rest of the world, and at favourable rates to boot. This privilege is being recklessly thrown away.

Every time the Fed prints more dollars to fight the domestic recession, it further devalues that debt. The lenders are understandably getting restless.

As is now becoming steadily more apparent, dollar hegemony was a major underlying cause of the crisis, for it allowed America to go on an unrestrained borrowing binge; the developing world is ever more minded to think its demise part of the solution.

The Fed is taking a massive gamble with America’s long term future by blindly pursuing further monetary stimulus; it may take time, but the dollar’s all powerful reign on the world stage is drawing to a close.

And they wonder why US business remains in a state of paralysed shock. Policy seems hell bent on destruction.

In Obama’s defence, it is usually said that the economic legacy he inherited was so poisonous that it was never likely to be easily fixed, and there is no doubt much truth in this contention.

But rather than focusing like a lazer on the economic catastrophe unfolding before him, Obama instead embarked on a wildly ambitious, disruptive and divisive legislative programme that has succeeded only in heaping further uncertainty on already damaged economic confidence.

If ever more mountainous public debt were not deterrent enough to investment and trade, the clutter of futile reform emerging from the White House would have frightened even the most loyal of American investors into inaction.

Stripped of his political authority, Mr Obama can only look hopelessly on as the newly enthused “Reds” suck the lifeblood out of health and financial reform. Hard won at near fatal political and economic cost, much of the president’s legislative programme may end up neutered to death.

Read the whole thing here.


Big Government

The Tea Party: America’s Oldest Free Traders

November 3, 2010 · Posted in The Capitol · Comment 
style=”float: right; margin-bottom: 10px; margin-left: 10px;”> href=”http://blog.heritage.org/wp-content/uploads/Tea-Party.jpg”> class=”alignnone size-full wp-image-29455″ title=”Tea-Party” src=”http://blog.heritage.org/wp-content/uploads/Tea-Party.jpg” alt=”” width=”200″ height=”240″ />

In 1773, American colonists href=”http://www.bostonteapartyship.com/robinsonteachest.asp”>dumped 342 chests of tea into the Boston Harbor. Their unwillingness to pay duties on imported tea made them our country’s original free traders.

As Constitutionalists, Tea Party members are likely to recall that the U.S. Constitution gave Congress the power to regulate commerce with foreign nations and between the states. Prior to that point, href=”http://www.usconstitution.net/consttop_arti.html”>tariff wars between the states disrupted commerce and threatened the country’s survival. By eliminating interstate trade barriers, the Constitution created a free-trade zone that allowed our country to prosper.

Trade barriers are literally the href=”http://cameroneconomics.com/tullock%201967.pdf”>textbook example of special interests using their influence to receive special treatment from the government at the expense of average Americans. The Halloween season is a good time to observe that Americans pay twice the world price for sugar. This is not just bad for consumers, it href=”http://www.ita.doc.gov/td/ocg/sugar06.pdf”>costs jobs. Trade barriers that increase the price of sugar have forced Hershey Foods, Brach’s, and other companies to close plants and lay off workers. U.S. trade barriers reward groups for their political clout and represent the type of influence-peddling that Tea Party members should oppose. id=”more-46026″>

Like the original patriots in Boston, today’s Tea Party members should be prepared to dump trade restrictions that benefit politically connected insiders while making our country poorer and less free.

The Foundry: Conservative Policy News.

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