Nobody but nobody likes a party-pooper. And while the glad-handers who presently occupy the right side of the aisle have been anything but prudent, the American electorate, if you believe the polls, sees them as bad people who would steal away their punchbowl. Not that life in these United States has been much of a party (by United States standards) of late, but, clearly, any actor who’d hint at entitlement reform is viewed as the kind of evil green meanie who’d rain terror onto a peaceful Whoville. Thus, as I suggested yesterday, they’ll deal on the fiscal cliff, because being a party-pooping-politician plays rather poorly in the opinions of the voting populace.
Now, talk about your parties; yesterday jolly old Saint Ben (Bernanke) pulled yet another goody from his bag of gifts. More QE — which is the Fed creating money to buy assets from bankers who’ll add the cash to their excess reserves which they deposit at the Fed that pays them .25% interest — and a promise that they’ll keep it up until the unemployment rate drops to 6.5%. And another promise that when it drops to 6.5% they’ll keep it up anyway. Yes, I quote Bernanke:
Reaching the thresholds will not immediately trigger a reduction in policy accommodation. No single indicator provides a complete assessment of the state of the labor market.
Kind Mr. Bernanke has not a grinchly (or Volckerly) bone in his body.
My son Nick and I meet once a week to discuss markets, world affairs, managing money, etc. This week we chatted a bit about the European debt debacle, how a nation can print, spend and regulate itself sick, and how it gets fixed. I told him that budget news out of Greece is only good news if its citizens are burning down Athens (as awful as that sounds). That means they’re trimming the public sector.
Truly, prosperity is not something policymakers can wrap up in a bow and hand out to their guests. It comes from economic freedom, creativity and hard work!
“How could it be so? It came without ribbons!… it came without tags!… it came without packages, boxes, or bags!” –The Grinch