In my view, this is the time to treat the American people like adults. Obama has done that this week to an extent by truly saying there is no panacea to bringing down oil prices and anyone who says otherwise is full of it.
He has responded to the Republicans' bankrupt demagoguery a little too much for my taste, as if he takes it to heart. True you don't want to be like Mitt Romney with a tin ear to the concerns of Americans and it's right for Obama to show empathy for Americans having to pay these high prices.
But it is not his fault, and realistically there may well be nothing that he should do. It's ironic how the GOP who allegedly is so about letting the market decide these things is trying to hang high oil prices on the President.
I don't much like the headline today in Poilitico where Democrats are now "nervous" and pushing Obama to open the strategic reserve. He's done this before and oil prices did not drop. True they didn't rise after this and you can get into the counterfactual argument as whether they would or not have risen had he not done this-in any case he never sold it as leading to a price drop but simply to address a supply concern due to the Libyan war- but at this point I don't think Obama and the Democrats should even dignify the Republicans' desperate attempt to grasp at straws by becoming nervous or taking it to heart.
Yet in Politico today we read that,
"On Friday, Treasury Secretary Tim Geithner suggested the SPR is a possibility. "There's a case for the use of the (reserves) in some circumstances, and we'll continue to look at that and evaluate that carefully," he told CNBC Friday morning."
Read more: http://www.politico.com/news/stories/0212/73279.html#ixzz1nUQMsRFu
Obama does not need to put himself on the defensive right now. The best defense is a good offense and there are plenty of targets.
Actually, the Dems should be scared, as the Fed may tighten in response to higher gas prices. Meaning a replay of 2008.
ReplyDeleteI like you blog, but you should get on board with Market Monetarism.
Federal deficits cannot stimulate unless the Fed prints money. And if the Fed can print money, why not dispense with the middleman, and put the money to work directly in the private sector?
That sia, I like your blog. You just need to grow past pure Keynesianism and partisan blinders.
Thanks Benjamin, I appreciate that. From where I sit you make a lot of sense in a lot of your comments and we actually seem to agree on quite a bit.
DeleteFor me it's that Obama haters who have partisan blinders on. To think that high oil prices are going to be the GOP salvation is delusional. You have Newt absurdly "promising" $2.50 gas prices if he's elected.
As far as Market Monetarism, it's interesting I'll grant you that. But I guess it goes back to the debate Friedman had with Walter Heller back in 1968-they collaborated in a Keynesian vs. Monetarist debate.
Heller's point was that he's no a pure fiscalist-he sees that sometimes Fed action is more appropriate, sometimes fiscal action.
I just think that like all anti-Keynesian economimcs MMers can be a little cold. Sure you can always try to argue about what's in the best interest from a macro standpoint. Maybe having the Fed give money to the Fed banks is the same effect as the fiscal authorities giving money directly to average people. But what about the immediate need to ameloriate people's pain and immediate needs.
I feel like you guys kind of gloss over that. Well if you are a loser in the economy tough luck but it's in the interest of the larger macroeconomy.
Then again sometimes monetary policy may not allocate new money as well as the fiscal authorities do. If the Fed pumps money into the economy where does it directly go? Into the banks. They then decide how to allocate the funds into the larger economy.
If the same money comes out of the Treasury it goes directly into peoples pockets or in social needs like rebuilt schools, bridges, etc.
I'm not convinced that fiscal policy and monetary policy are the same thing but without a middleman.
To me Keynesianism isn't pure. Think of it this way-you say fiscal stimulus is always wrong. Keynesians don't say monetary stimulus is always wrong so to me the purists are those who say fiscal stimulus is always wrong.