The wisdom of Sarah Palin

“Helicopter” Ben Bernanke created about $600 billion dollars that he used to buy much of this year’s deficit. Other than stimulating the stock market (yeah!), it does not seem to have done much for the “real” economy: the one in which the unemployed find it impossible to find a job.

The Fed thought it would have a stimulative effect, but the economy grew at an anemic 1.7% for the second quarter of 2011 (after a lousy 1.9% for the first quarter). Team Obama told us that this would be the “summer of recovery.” Do you feel that recovery yet?

Here’s what Sarah Palin said about this plan in November of 2010…

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.

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.

And if it doesn’t work, what do we do then? Print even more money? What’s the end game here? Where will all this money printing on an unprecedented scale take us? Do we have any guarantees that QE2 won’t be followed by QE3, 4, and 5, until eventually – inevitably – no one will want to buy our debt anymore? What happens if the Fed becomes not just the buyer of last resort, but the buyer of only resort?

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.

We shouldn’t be playing around with inflation. It’s not for nothing Reagan called it “as violent as a mugger, as frightening as an armed robber, and as deadly as a hit man.” The Fed’s pump priming addiction has got our small businesses running scared, and our allies worried. The German finance minister called the Fed’s proposals “clueless.” When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again, maybe it’s time for Chairman Bernanke to cease and desist. We don’t want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings. We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.

How's that for a prediction that came true?  There's even talk about QE3!  And from a woman who's caricatured by the "smart set" as too stupid to breathe.

The national debt is getting so big that there is no reasonable way of actually paying it off. The classic way that a nation reneges on its debt is not via bankruptcy or by default but by inflating its currency.  Paying off debt with dollars that have the buying power of 50 (or 40 or 30 or 20) cents today. Of course that stiffs not just the people who have bought your debt, but it also robs the nation’s savers and pensioners as the things they can buy with their money becomes ever more expensive and they can afford to buy less and less.

I am really amazed that her enemies both Right and Left continue to portray Palin as stupid when she’s actually exhibiting a high level of basic wisdom on economic and legislative issues.  That resonates with the American people. Since the election of 2008 Palin has been largely in a defensive mode while keeping her visibility up; occasionally making sharp, insightful remarks that sting, like her reference to “death panels” which did incredible damage to ObamaCare.

If she should become a candidate for President, she can move from defense to offense, using some of her past comments as ammunition, showing just how on-target her ideas have been. Palin would be the most formidable Republican opponent to Obama, no matter the hatred of the Left or the disdain of the Establishment Right. The fact the she has enemies on either side will make her even more attractive to the vast majority of the American people who give low marks to both the President and Congress.

It helps to have the right enemies.