The Obamanomics Electric Kool-Aid Acid Test - The American Spectator | USA News and Politics
The Obamanomics Electric Kool-Aid Acid Test
by

You’ve got to hand it to MSNBC. It takes a lot of moxie to look at an economy shedding jobs, with unemployment and interest rates rising, and come up with the headline: “Evidence mounts that recession may be ending.”

In March 2008, I attended a panel discussion where an economist for a private investment firm explained that rising bankruptcy rates pointed toward an impending financial crisis — which was exactly what happened six months later. At last night’s annual gala for the America’s Future Foundation, I ran into the same economist, who shook his head and said of the current policy, “They’re trying to re-inflate the bubble!”

Ultimately, however, this policy will yield higher interest rates or inflation, or perhaps both. The Wall Street Journal explains what’s happening:

Bond markets continued to gyrate Thursday after a sharp run-up in 10-year Treasury yields the day before. The bond market pushed yields of 10-year Treasurys down to 3.674% from 3.70% Wednesday, but they remain well over mid-March’s 2.5% level. Yields on mortgage-backed securities continued to climb, pushing 30-year fixed-rate mortgages to 5.44%, the highest since early February.
The Fed has embarked on a massive effort in recent months to buy Treasurys and mortgage-backed securities, a bid to drive up their prices and push down yields. It aims to keep borrowing costs low, hoping cheap mortgages in particular will spur the still-weak economy. . . .
So far, the Fed has purchased $130.5 billion of the $300 billion in long-term Treasury debt it began buying in March. It also has bought $481 billion in mortgage-backed securities and has said it could buy as much as $1.25 trillion worth.

In other words, the monetary dog is chasing its fiscal tail — a can’t-miss formula for stagflation. Pity the investor who is foolish enough to rely on MSNBC to stay informed about economic news.

Sign up to receive our latest updates! Register


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Be a Free Market Loving Patriot. Subscribe Today!