From the WSJ: 'The American people aren't stupid," thundered President Obama yesterday in Miami, ridiculing Republicans who are blaming him for rising gasoline prices. ...
Another suspect—one Mr. Obama doesn't like to mention—is U.S. monetary policy. Oil is traded in dollars, and its price therefore rises when the value of the dollar falls, all else being equal. The Federal Reserve throughout Mr. Obama's term has pursued the easiest monetary policy in modern times, expressly to revive the housing market. It has done so with the private support and urging of the White House and through Mr. Obama's appointees who are now a majority on the Fed's Board of Governors."
Inflating out of a recession or debt burden is an old Keynsian trick. It's failed before and it will fail again here - maybe even more hugely since there is very little actual productive economy to pull the country out of the ditch. Right now, we are able to eek by because our treasury bonds are marginally less risky than European or Nigerian bonds.
But Obama knows that he doesn't have to fool all of the people all of the time - just enough of the people on 6 Nov 12 to get the majority of electoral votes.
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