Governor Good-Hair flushes out the Fed for traitors & threatens to rough 'em up if they tread into Texas

Rick Perry sees treachery and treason coming from the Federal Reserve Chairman Ben Bernanke...and, by implication,  conservative economics guru Milton Friedman. A sign of the times in a Republican party where conservatism has been almost wholly supplanted by rabid reaction. The God 'n Guns Governor suggests a pretty ugly "Texas welcome" is in order for Chairman Ben.

Milton Friedman can kiss gun-totin' Guv's butt!

Ezra Klein has it at WaPo "WonkBook":

What potential policy maneuver is a major presidential candidate calling "almost treasonous"? Is it a) going to war without explicit authorization from Congress, b) doing nothing about the 15 million unemployed even as their temporary joblessness hardens into a structural disadvantage, or c) purchasing long-term Treasury debt in order to push interest rates down?


If you guessed "purchasing long-term Treasury debt in order to push interest rates down," you got it. While campaigning in Iowa, Texas Governor Rick Perry gave his take on Ben Bernanke and the potential for a third round of quantitative easing. "If this guy prints more money between now and the election, I don’t know what y’all would do to him in Iowa, but we would treat him pretty ugly down in Texas. Printing more money to play politics at this particular time in American history is almost treacherous, or treasonous, in my opinion."


If you ignore the implied threat of violence against the head of America's central bank, Perry's position is unremarkable in today's Republican Party. But that is perhaps what is so remarkable about it. The GOP's turn against monetary policy is one of the most consequential and under-discussed trends in economic policy.

It was the conservative icon Milton Friedman, after all, who pioneered the argument that the Great Depression was largely the fault of poor monetary policy. His analysis had the dual advantages of being both true and useful to skeptics of government spending. It implied that there were more ways to prevent and respond to recessions than to simply have Congress take out the credit card.

But as Ramesh Ponnuru writes today in Bloomberg View, since the start of the financial crisis, Friedman's lessons have been forgotten, and even rejected, by many Republicans, in part because it's easy to look at the Federal Reserve's policy and misunderstand it. "We don’t have loose money, and we haven’t during our entire economic slump," argues Ponnuru. "A big reason that slump has been so deep and long is that the Fed is keeping money tight: It’s not letting the money supply increase enough to keep current-dollar spending growing at its historical rate."

The typical answer to this is to point to how the money supply has expanded, or how commodity prices -- one signal of inflation -- rose earlier in the year (they are falling now). But looking at the money supply on its own tells you rather little. You need to look at it in relation to the economy. As for commodity prices, as Ponnuru says, is anyone really willing to contend that "we have loose money any time Asian consumption of precious metals increases, or there’s a disruption of the oil market"?

The danger here isn't an opportunistic, partisan turn against sound monetary policy. That's a problem, but it's also a near inevitability in a two-party system like ours, and given the Federal Reserve's independence, it's one that can be mostly ignored. The danger here is a real turn against sound monetary policy that smart Republicans find they can't quietly abandon when they enter office. That's a world in which a Republican administration will find itself unable to make good nominations to the Federal Reserve, and perhaps even unable to stop Congress from making unwise alterations to the mandate and powers of the Federal Reserve. That's a world in which the lessons of the Great Depression -- and of Milton Friedman -- aren't just forgotten, but are in fact lost.