If you’re feeling uneasy about the economy and wondering why unemployment remains stubbornly high while money is so cheap, you are not alone.
Not since the Civil War has United States relied on the printing of dollars to make the economy work. Washington’s intervention and attempt to spend our way back to prosperity is not only failing, it is turning our system on its head.
Real economic recovery is not only being delayed, but we are in effect killing the goose that lays the golden eggs. The record is clear: The Federal Reserve’s engineering of low interest rates has done more to facilitate deficit spending and growth of government than they have stimulated private sector lending and job creation. For further proof of this, look no further than Friday’s dismal jobs numbers.
Bernanke could rise to the occasion, educate and lead. He could make a case for the need to support an increase in the debt ceiling that requires mandatory spending cuts and then ties the debt ceiling to a percentage of GDP.
The central problem of our time is not the debt ceiling. It is the government claiming too much of the economy. If Bernanke stands with those determined to restore fiscal discipline by reducing federal spending and reforming entitlements, the other side may blink and acquiesce to a budget framework that gets us on a sensible path that limits national debt to a percentage of the country’s economic output.