Help from Unexpected Sources
As the market continues its mini-bubble based on QE2, help to bring some sanity to the equation has come from expected sources. In light of the hands off policy on the Fed by Geithner, and why wouldn’t he be hands off, as he is really one of them, it is refreshing to see comments like this:
In a letter to Mr. Bernanke, four Congressional Republican leaders expressed “deep concerns” about the Fed’s plan, known as quantitative easing.
“While intended to improve the short-term growth of the U.S. economy and help maintain a stable price level, such a measure introduces significant uncertainty regarding the future strength of the dollar, and could result both in hard-to-control, long-term inflation and potentially generate artificial asset bubbles that could cause further economic disruptions,” the letter said.
The Republicans who signed the letter were the Senate minority leader, Mitch McConnell of Kentucky; Senator Jon Kyl of Arizona; Representative John A. Boehner of Ohio, who is in line to become the House speaker in January; and Representative Eric Cantor of Virginia, the No. 2 House Republican. They emphasized that the Fed should be insulated from political pressure but also said the central bank “should be open to receiving input and data from a wide range of sources.”
The one other worthwhile thing that I have seen this week is this column by Tom Friedman: