Palin's Common Sense Economic Principles Prove Bernanke's QE2 Experiment Was Wrong

Inflation climbs to 3.6% in May. Palin was right!

By Howard Richman and Raymond Richman

AmericanThinker.com

June 23, 2011

On June 15, the Bureau of Labor Statistics released the inflation data for May. If you didn't hear about the new data, you are not alone -- the mainstream media buried the story. Why? Inflation hit 3.6% in May, even though gasoline prices actually fell that month. Inflation has been rising since November, as shown in the graph below:

These rising prices were largely caused by Federal Reserve Chairman Ben Bernanke's rapid expansion of the U.S. money supply, known as QE2 (Quantitative Easing 2). But inflation wasn't supposed to get this high.  Back in November, Bernanke told his fellow central bankers that the Federal Reserve's Open Market Committee (FOMC) was aiming for an inflation rate no higher than 2%. Specifically, he said:

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'When people in Washington start creating fancy new phrases, instead of using plain English, you know they are doing something they don't want us to understand.'

Just Let The Economy Recover

By Thomas Sowell

Investor's Business Daily

May 3, 2011

When people in Washington start creating fancy new phrases, instead of using plain English, you know they are doing something they don't want us to understand.

It was an act of war when we started bombing Libya. But the administration chose to call it "kinetic military action." When the Federal Reserve System started creating hundreds of billions of dollars out of thin air, they called it "quantitative easing" of the money supply.

When that didn't work, they created more money and called it "quantitative easing 2," or QE2, instead of saying:

"We are going to print more dollars — and hope it works this time."

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Will The Fed Ruin America?

This author thinks not . . .

America will survive the errors of Ben Bernanke's trigger-happy Federal Reserve

By Ambrose Evans-Pritchard

Telegraph.co.uk

November 7, 2010

At each stage of the great 20-year debt bubble we were told by the US Federal Reserve that it was not the job of central banks to worry about the dotcom boom or the surging cost of California property or the price of any other asset in the grip of credit fever.

A Princeton professor named Ben Bernanke was chief theorist for this doctrine. At the Fed’s Jackson Hole conclave in 1999 he gave a speech laden with data arguing that central banks should ignore asset booms and focus exclusively on inflation.

Fed chair Alan Greenspan liked the speech so much that groomed Bernanke for the next vacancy at the Fed Board in Washington. He had a last found an academic willing to clothe his own proclivities with Ivy League respectability.

Yet after leading America and the world into calamity with this seductive mischief – which overlooked the well-documented risks of credit seizures once a debt bubble pops – we are now told by Bernanke that the purpose of printing more money is to push up house prices and feed Wall Street.

“Higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending,” he wrote in the Washington Post. So there we have it, the `Bernanke Put’ in open daylight, the affirmation of asymmetric monetary policy. Let booms run unchecked: shield investors from loss when things go wrong.

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