You know, the former Fed Chairman Ben Bernanke He just won the Nobel Prize in Economics. A friend of mine suggested that it was the worst Nobel Prize in economics since Paul Krugman.
I’m not sure I’d go that far, but that’s probably because I know and respect Ben as a good civil servant and a very good former professor at Princeton. In fact, being a Princeton College Republican is not easy.
So there, that’s not personal, but, but, but, I think his stop-and-go policies, especially in the early 2000s, when he kept interest rates very low for a very long time, when he devised a very high – strong liquidity, when he took A strong dollar and made a weak dollar, and when all the fine-tuning he did led to a boom in gold, commodities and housing – I think it was a big mistake and that mistake led to a financial meltdown, most notably the mortgage collapse he had to bail us out later.
It’s like a fireman who lights a fire and then wants to take credit for putting it out. not good. All this reminds us of the mistakes made by J. Powell nearly two years ago.
Bernanke after 9/11 was concerned about deflation, so he authored a major reduction in the league’s money supply, while George W. Bush’s tax cuts actually succeeded in boosting economic growth after 9/11.
This was raised because Bush moved to the supply side. He’s not given credit for that, but he should. He lowered the highest personal tax rate and eliminated tax rates on capital gains and dividends.
So, when everything was taxed less, including investment, we got more of it and the Bosch boom didn’t require a big opening of the cash taps. We were fine, the supply side worked, the Laver curve worked, but Ben Bernanke wasn’t watching and that got everyone in trouble. looks familiar?
Post-Covid, the V-shaped recovery in late 2020 and early 2021 was ignored by Biden socialists and contemporary critical theorists J. Powell. to remember?
Everyone was cheering for a $2 trillion stimulus package. That means everyone is in the left camp, but we didn’t need him, he started big swell And J. Powell opened those cash taps on a larger and wider scale. Although the economy was growing at 6% – it was inherited by Donald Trump’s tax cuts, deregulation and energy dominance.
So here we are again. It’s just reverse rescue. Bernanke had to save America, he thought, by turning the faucets on, then off, and then back on again. c. Powell kept the faucets open, opened them wider and now he’s crushing down until there is no tomorrow.
I don’t know if this is modern critical theory, or what, but I do know that either way it was bad critical practice. There is an easier and softer way. Keep the dollar stable with respect to real goods and commodities, keep the faucets open at the middle level, and we’ll have price stability. Leave the incentives for growth to tax and regulatory policies and limited spending where they belong.
The monetary lever for inflationFinance lever for growth. From Ronald Reagan, Jack Kemp, Art Laver, Steve Forbes, and a whole host of us – we’ve been saying this for more than four decades.
Now, another point about Ben Bernanke. I don’t know why he and others are so determined to save failed institutions. We had a chance during that financial crisis to weed out some real turkeys, like Fannie and Freddie – who should have been privatized or remember the madness: Bear Stearns saved. Merrill was sold and Lehman was left to fail. Entire parts of AIG’s lockout could have been scrapped or discarded, but they were salvaged.
John Taylor of Stanford has often written that it is the erratic, unknowable bailout policies that have done as much or even more damage to the financial world as the opening to cash spigots after the crisis. Governments should not choose winners and losers.
However, today, it is astonishing to me that Fannie and Freddie are now owned – lock, stock and barrel – by the United States government, aka the taxpayers. We shouldn’t bail out student loans, mortgage lenders, gasoline prices, rioters, banks, car companies, semiconductor companies, electric car makers, wind and solar farms, and insurance companies.
How about, Make My Day: No New Bailouts or Make My Day: $31 trillion in debt has gone too far. Do not you think?
This article is excerpted from Larry Kudlow’s opening comment on the October 11, 2022 edition of “Kudlow