It's ironic that the same day we get the results of a huge electoral mandate for change, we get the Federal Reserve Board essentially giving us the same medicine that's failed miserably to do what it's designed to do. Voters just rejected policies that aren't working. They think it's time for a change.
But neither the president nor the Fed seem to get it. Yesterday, the President vowed to stand behind policies that arenâ€™t working. But the Federal Reserve Board is also stubbornly committed to policies that arenâ€™t working. The Fed announced that it will print another trillion dollars or so, after having already created trillions of dollars to stimulate economic expansion.
But this printing of money to buy government debt hasn't worked. Banks are still not lending. Potential home buyers are still not buying. And companies that have cash are holding on to it, instead of expanding and creating jobs.
Of course, some folks love what the Fed's doing.
The big spenders in Congress and the White House love it when the Fed buys government debt...It enables politicians to spend even more money they don't have. And Wall Street banks love to borrow cheap money, which they use to buy gold and make currency bets.
On the other side of the tracks is the average American, who's getting killed by a beaten down dollar. It costs more to buy food, as commodity prices spike. And savings are losing their value, as the dollar devalues and interest rates are at zero. Also, as our dollar loses value against other currencies, everything that we buy that's made overseas is going to start costing more. All this even has some Wall Street types getting worried.
A big hedge fund guy named Paul Singer warned last month that the Fed's money printing is going to lead to inflation that "no American can imagine." he says the threat of Weimar Republic-style inflation keeps him up at night.
And we admit, sometimes it keeps us up at night, as well. So as Americans are waking up to what's working and what's not working, the folks in the White House and at the Fed appear to be asleep at the wheel.
Is there any designated driver that can keep this from turning into a major car wreck?