Thursday, November 4, 2010

The Republican attack machine risks damage to our economy


DRUDGE is the master of the Republican attack machines. That website generates a massive amount of traffic. And its very heavily tilted to Republicans. In fact, it goes way overboard in making Republicans look good, and making Democrats appear to be equivalent of the evil empire. Drudge bends the truth, constantly. And in doing so, it does a tremendous disservice to America, and damage to our economy.

A case in point is the primary headline as I type this post: "BACKLASH BUILDS AGAINST FED PUMPING". That headline makes it appear as if the FED's recent move to execute on $600 Billion of addition quantitative easing for our economy is something evil that needs to be stopped. That's simply not true. But I suspect Drudge won't stop pushing this point. The Tea Party will be up in arms. And the vast majority of the politicians in Washington, who are mostly clueless as to how economics works, will wind up raising hell and trying to stop the FED's efforts. That hell raising will be led by idiot Republicans. Oh boy. We gave the keys to the asylum to the idiots. Now we're going to pay a terrible price.

Follow the Drudge headline to the underlying article. The pressure building is coming from foreign central banks. Of course they're mad. Our FED's easing will wind up putting pressure on their currencies. Our dollar will weaken. Their currencies will strengthen. That will make our nation's products more favorably priced in the international markets in relation to their products. Our economy will get a boost. Their economies will be hurt. And that's what should happen right now. But the other countries are mad about it and doing their best to stop our efforts.

Of course they're mad. That money our FED is injecting into our economy is finding its way into other countries. That foreign investment pumps their economic activity, which is already overly strong in many cases, and causes inflation for them. They should allow their currencies to get stronger to combat that inflation. That would kill off some of their exports and relieve those inflationary pressures. But in that process, that will wind up putting their citizens out of work and hurting their businesses. So, they resist. And they do exactly the opposite of what they should be doing. They fight back by taking their country's financial resources and buying our debt in an effort to keep their currencies weak. Our FED's moves are causing them to have to buy more of our debt. That compounds both their problems, and ours. But their actions distort the currency markets by causing a massive distortion of international trade balances. The end result is a currency war that harms everyone.

But, we must re-balance world trade. America runs a massive trade deficit. The countries doing all the complaining run massive trade surpluses, and they would like it to stay that way. But it can't. If we run deficits for a number of years, we have to reverse course and run surpluses eventually, so it all evens out over longer periods of time. If that reversal can happen now, our exports will increase, our economy will improve, more Americans will find jobs. And that's why our FED must do what it is doing. And that's why its important for those other countries to stop their complaining and stop their interference in the currency markets. If they would simply stop buying our debt, the re-balancing of international trade can take place through the free market adjustments to world currencies.

But DRUDGE? Their irresponsible painting of the FED's actions runs the risk of firing up the mob of ignorant people in our country. God help us if the DRUDGE inspired ignorant hordes are successful in putting a stop to the FED. If that were to happen, our economy would crash and burn to the point that there would be no bottom to the unemployment rate in America.

Stop reading DRUDGE. Stop electing idiot Republicans who consistently prove they know nothing about economics. And Richard Burr, he's a clueless dolt on the economics front.

North Carolina deserves better than Republican Senator Richard Burr.

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