1776 Coalition :: Sarah Palin Takes Aim at Fed

Sarah Palin Takes Aim at Fed

by
November 9, 2010

By SUDEEP REDDY, The Wall Street Journal

Sarah Palin, delving into a major policy issue a week after the mid-term elections, took aim Monday at the Federal Reserve and called on Fed chairman Ben Bernanke to “cease and desist” with a bond-buying program designed to boost the economy.

Speaking at a trade association conference in Phoenix, the potential 2012 presidential candidate and tea-party favorite said she’s “deeply concerned” about the central bank creating new money to buy government bonds. Ms. Palin said “it’s far from certain this will even work” and suggested the move would create an inflation problem.

Monday’s remarks, in which Ms. Palin staked out a firm stance on a complex topic, follow criticism from GOP strategist Karl Rove, who questioned her “gravitas” based on her appearance in a cable-television reality show about the Alaskan wilderness. Other Republicans have said she would have to answer for quitting her job as Alaska governor partway through her term.

Ms. Palin has made clear she intends to forge a policy profile apart from her celebrity image. She used her Facebook page over the summer to begin laying out foreign policy views, and used a National Review essay last week to caution newly empowered conservatives that compromising with Mr. Obama on spending would result in the GOP “going the way of the Whigs.”

The Fed last week said it would buy $600 billion in Treasury securities over the next eight months in an effort to lower the 9.6% unemployment rate and ensure that inflation, which is running below the central bank’s informal target, does not morph into outright deflation. Foreign officials have criticized the move for weakening the dollar and threatening speculative capital inflows that could hurt their own economies.

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,” according to Ms. Palin’s remarks, obtained in advance by National Review magazine, before the Specialty Tools and Fasteners Distributors Association. “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.”

U.S. politicians generally avoid criticizing the Fed, especially its monetary policy, to maintain the central bank’s traditional independence from politics. But several Republican lawmakers last week assailed the Fed’s decision to engage in another round of bond-buying, known as quantitative easing.

Ms. Palin’s remarks Monday were the sharpest yet by a political figure about the Fed announcement. They echoed economists from the left and right who have questioned the policy’s effectiveness and potential drawbacks.

To read more, visit: http://online.wsj.com/article/SB10001424052748703514904575603023040162294.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsTop

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