We don't dabble in political chatter as a rule. The economic situation and the bold rhetoric from most of the Republican candidates is forcing us to weigh in. The popular ideas from last night centered on several basic themes. 1) The Fed is bad. Bernanke should be fired. The Fed "fixes" the price of money (and at the wrong level-some said too high some too low). 2) Debt - Gov., student, or mortgage is bad. 3) Managing businesses and people into bankruptcy is good.
I do not understand the first in any context. A central bank is a mandatory institution of an advanced economy and an independent one is better. Greenspan's actions are far more responsible for the present situation than Bernanke's actions post crisis. Greenspan was a Time Magazine cover boy, "world saver" and incredibly popular. The credit prosperity was a winner on Main St. and Wall St. The Fed, in fact, "fixed" the price of money (through the funds rate) under Greenspan. No longer. That structure is the key difference between an interest rate and a quantitative regime. (The lack of comprehension of this should scare many). No person was suggested as replacement, so no analysis of a different monetary policy can take place. [Cain wants to bring Greenspan back]
The anti-debt crusade is a head scratch-er for us. No candidate seemed to grasp that no economic advance since the Industrial Revolution has occurred without the creation of and acceptance of credit. The debts in all three categories have already been taken on. To say you are "against" them is nothing more than side stepping a reality.
The third point plays off the second. Failure may be a necessary characteristic of capitalism but that does not mean it is harmless. Systemic failure is different from hypothetical failure. I was amused to hear how many blame "people who bought homes they could not afford." Strangely, this fear never came up from a seller at a closing in 2006. That any of these policies can be construed as growth oriented is astounding. The economic policy would look like this: Hike rates, restrict borrowing and default on the existing debt mountain. But change the tax code some to create jobs and grow the economy. Good luck with that.
We are radical pragmatists ideologically. The Democratic candidate, sometimes known as the POTUS, owns the economic situation. If this is the "solution", we are in big trouble.