It’s the dollar, stupid
So, GWB and San Fran Nancy have been sniping at each other over the nation’s economic malaise. Who’s to blame? He says inaction by a Democratic congress is to blame, while she says his administration’s incompetence is to blame. Well, as entertaining as this tussle is, they’re both wrong.
Fabius Maximus has a good post about rising commodity prices, in which he reminds me about this truism from Milton Friedman:
Inflation is always and everywhere a monetary phenomenon.
Combine this thought with the following observation from Larry Kudlow:
Whether it’s energy, wheat, grain, corn, or whatever, since these raw materials are priced in dollars on global markets, a strong greenback will reduce commodity prices. And that, in turn, will lower both consumer and producer inflation. This would help corporate profits and would boost the purchasing power of wages.
In other words, a strong dollar would relieve gas prices and boost the economy. But so far as I know, the president never mentioned the dollar. And I don’t think any of the media people asked him about it.
The media has this recession exactly backwards. Every day, I hear the talking heads say that oil prices and food prices are driving inflation. They’re being driven by inflation, meaning they’re being driven by the likes of Bush, Pelosi, and every other big-government politician on Capitol Hill (a.k.a., the porkers).
The federal government has the absolute power to stop this recession. Do they have the discipline or will to do so?