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Sunday, December 05, 2010

Swindling neocons at National Review line up behind Keynesian con artists at Fed

National Review Supports Fed's QE2 as "Conservative"

(The New American) -- by William F. Jasper --

National Review, the putative voice of political conservatism, continues to flack for the Federal Reserve and Fed chief Ben Bernanke's latest round of money magic known as "quantitative easing," or QE2.

In a December 1 column at National Review Online entitled "The Conservative Case for QE2," David Beckworth notes that "QE2 has many conservatives worried. They are concerned that these staggering increases in the monetary base have the potential to unleash a 1970s-type inflation and put the country on the path to economic ruin."

Beckworth acknowledges that the Fed had already vastly expanded the money supply in QE1:
After increasing the monetary base — currency in circulation and bank reserves — by about $1.2 trillion over the last two years, the Fed has decided to expand it again, by another $600 billion.
Beckworth seems surprised that conservative commentators and Republican legislators are alarmed by this profligacy. They are confused, he says.

"One reason for this confusion," suggests Beckworth, "is a failure by some conservative commentators to understand the real purpose of QE2. It is not solely about lowering interest rates, increasing bank reserves, and encouraging bank lending, though all of those will occur. Rather, it is about fixing a spike in the demand for money that has significantly hampered spending."

Conservatives must be aware, says Beckworth, that "if it works according to plan, QE2 will promote conservative principles." Really? How so? Only the Fed, he avers, can play the savior role needed to kick-start the economy into a "virtuous cycle" needed for recovery...

Amazingly, Beckworth contends that the Fed's multi-trillion-dollar expansion (a reported $8.95 trillion through the Fed's newly established Primary Dealer Credit Facility, PDCF, since 2008) has been too tight-fisted.

"The fact that total current-dollar spending has remained depressed for so long means that the Federal Reserve has failed to do its job and effectively has kept monetary policy too tight," says Beckworth.

"So how does QE2 promote conservative principles?" he asks. "It does so," Beckworth claims, "by reducing the likelihood of further government spending on the economy." In the strange universe occupied by Beckworth and the neoconservatives at National Review, central planning and command policies by the Fed are classified as "market-based" economics...

Bernie Madoff, "Helicopter Ben," and Buckley's Heirs
This is not the first time that National Review has come to the aid of the Fed and Bernanke, who earned the nickname "Helicopter Ben" for his advocacy of "helicopter drops" of money into the economy. Of course, the money drops through QE1 and QE2 have vastly exceeded anything the Fed could hope to carry out even with the Pentagon's entire helicopter fleet; what the Fed — and National Review — are pushing is the equivalent of conscripting every C-5 and C-130 cargo plane for a continuous round-the-clock money drop, with the key targets being Goldman Sachs, Citigroup, and other favored Wall Street friends.

When Rep. Ron Paul and other constitutionalists nearly succeeded in getting Congress to force an audit of the Fed this past summer, National Review Online featured an op-ed by Josh Barro ("Mend the Fed") that argued instead in favor of Sen. Bernie Sanders' watered-down one-time audit, which would focus only on the "emergency" bailouts, a small portion of the Fed's overall activities. Barro is aghast at efforts to "End the Fed," claiming that it is necessary institution.

In November, National Review again came to the defense of the Fed with articles by senior editor Ramesh Ponnuru ("Conservatives and QE2" and "More on QE2").

In their convoluted rationalizations for QE2, the writers at National Review have adopted "Fedspeak" or "Greenspeak," which former Fed chief Alan Greenspan (a favorite guru of the National Review crowd) boastfully described as "purposeful obfuscation" and "destructive syntax."

However, as we noted recently ("Faux Conservatism: Fox Gets It Wrong"), this is entirely in keeping with the pseudo-conservatism known as neoconservatism promoted by National Review's founder William F. Buckley, and the oxymoronic "Big-Government Conservatism" supported by National Review veteran Fred Barnes...MORE...LINK

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