Most recently, Governor Palin has been a leading voice on monetary policy. She also spoke out on the devaluing of the dollar more than a year ago. Governor Palin has effectively addressed the issue of a weakened dollar and its relationship to the rising U.S. debt and the policy of quantitative easing that contributes to inflation. She addresses these issues in the context of how policies affect the American people directly and what can be done to address these problems.
Regarding the devaluing of the dollar, Governor Palin recognized that out-of-control spending and debt both contribute to the problem, while cutting spending and reducing debt, in addition to becoming more energy independent help provide the solution. In October of 2009, Governor Palin said:
In fact, today a United Nations official called for a new global reserve currency to replace the dollar and end our “privilege” to run up huge deficits. We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar.Discussion of issues such as the price of gold, standard currencies, and the like are generally left to members of the banking industry and economists. Governor Palin distills these issues down to describe why they are important for everyday Americans-- governmental spending, national debt, energy independence,and commodity prices. Obviously, governmental spending and the national debt are related, but Governor Palin addresses why her signature issue of energy independence ties into value of the dollar, as it puts America at the mercy of foreign countries for both energy sources and potential changes in trade currency that would have far reaching ramifications. The increase in commodity prices ties into one of the problems that Governor Palin discusses with her recent discussions on Quantitative Easing--rising grocery prices. The National Review recently published an excerpt of a speech that she gave on this "priming of the pump" by Ben Bernanke:
All of this is a result of our out-of-control debt. This is why we need to rein in spending, and this is also why we need energy independence. A weakened dollar means higher commodity prices. This will make it more difficult to pay our bills – including the bill to import oil.
We’re ignoring the looming crisis caused by our dependence on foreign oil. Because we’re dependent on foreign nations for our oil, we’re also at their mercy if they decide to dump the dollar as their trade currency. We can’t allow ourselves to be so vulnerable to the whims of foreign nations. That’s why we must develop our own domestic supplies of oil and gas.
I’m deeply concerned about the Federal Reserve’s plans to buy up anywhere from $600 billion to as much as $1 trillion of government securities. The technical term for it is “quantitative easing.” It means our government is pumping money into the banking system by buying up treasury bonds. And where, you may ask, are we getting the money to pay for all this? We’re printing it out of thin air.Governor Palin also does an excellent job of articulating the effects of Quantitative Easing on Judge Napolitano's show a couple of weeks ago. For the video, courtesy of the Right Scoop, go here.
The Fed hopes doing this may buy us a little temporary economic growth by supplying banks with extra cash which they could then lend out to businesses. But it’s far from certain this will even work. After all, the problem isn’t that banks don’t have enough cash on hand – it’s that they don’t want to lend it out, because they don’t trust the current economic climate.
All this pump priming will come at a serious price. And I mean that literally: everyone who ever goes out shopping for groceries knows that prices have risen significantly over the past year or so. Pump priming would push them even higher. And it’s not just groceries. Oil recently hit a six month high, at more than $87 a barrel. The weak dollar – a direct result of the Fed’s decision to dump more dollars onto the market – is pushing oil prices upwards. That’s like an extra tax on earnings. And the worst part of it: because the Obama White House refuses to open up our offshore and onshore oil reserves for exploration, most of that money will go directly to foreign regimes who don’t have America’s best interests at heart.
A few quick facts about the Fed. It was established in 1913 by President Wilson to address banking crises, but its general goal was to provide stability to prices. The Fed is an independent entity, as its decisions do not have to be approved by the President prior to implementation, but it is under the oversight of Congress. In 1977, the Fed was forced to also met another mandate in addition to price stability: maximization of employment.The Fed's dual mandate often requires contradictory actions, and thus makes these goals difficult to simultaneously meet.
Governor Palin does a very effective job at addressing the earlier Fed mandate in her speech and in her appearance on Judge Napolitano's show by addressing impact of inflation on grocery prices while also addressing the fact that she first warned about a year ago--the direct relationship between energy independence and the value of the American dollar. She also discussed on Napolitano's show that QE2 could potentially put America in the same position as countries like Japan with such actions by the Fed. In a Facebook post following her QE2 speech, Governor Palin also addresses the second mandate of the Fed--unemployment (emphasis mine):
Will QE2 then at least boost domestic investment? No, again. As I explained in my speech in Phoenix, the reason banks aren’t lending and businesses aren’t investing isn’t because of insufficient access to credit. There’s plenty of money around, it’s just that no one’s willing to spend it. Big businesses especially have been hoarding cash. They’re not expanding or adding to their workforce because there’s just too much uncertainty created by a lot of big government experiments that aren’t working. It’s the President’s own policies that are creating this uncertainty.Governor Palin understands and emphasizes the effect that the Fed's actions not only drive up inflation which increases grocery prices and other expenses for American families (i.e. their actions have not stabilized prices), it affects American businesses that provide jobs. Governor Palin stands firmly against the actions of the federal government in policies which simultaneously devalue our dollar, drive up our debt and leave us dependent on foreign sources of energy. She also stands against the actions of the Fed which inflate prices at a time when Americans are already on tight budgets and do nothing to aid employment.
As an additional note, the Left,uber purists, and Paulbots often argue that Governor Palin supported the bailout in the Fall of 2008. However, it should be noted that such support can only be construed as support for her running mate, Senator McCain, and due to the limited information of the details of the plan at the time of the Senatorial vote. Any discussion of the bailouts following the campaign showed that Governor Palin did not support them. For example, in an interview with Human Events in December of 2008, Governor Palin said:
Of course, we saw [Federal Reserve Board Chairman Ben] Bernanke and others appear to change the rules right away, it seemed like, after that initial rescue plan or bailout was given the green light, then everybody in the public, including me, started hearing that the rules were changing on where those dollars would go and what the criterion would be. Unfortunately, that leads to distrust of decisions our politicians make on our behalf and bureaucrats make on our behalf.Governor Palin remains consistent in her belief that the reach of elected officials and appointed bureaucrats be short and the goal of any government action be done in concert with the will and the benefit of the people.
Thanks to Chicago's Conservative for his assistance.
Crossposted here and here.