Deflation Sensation

As Republican convention organizers make fools-gold concession to Ron Paul Revolutionaries about the minutiae of monetary policy platform language, it’s worth remembering that there really are significant differences between the two parties on this obscure but critical topic. Mitt Romney made his views (and loyalties) clear just yesterday:

In an exclusive interview with FOX Business Network Thursday, presumptive presidential nominee Mitt Romney said he would not reappoint Federal Reserve chairman Bernanke when his term expires in 2014.

“I would like to select … a new person to that chairman position, someone who shared my economic views, someone that I thought was sympathetic to the needs of our nation and I want to make sure that the Federal Reserve focuses on maintaining the monetary stability that leads to a strong dollar, and confidence that America is not going to go down the road that other nations have gone down to their peril,” Romney said….

Investors have been keeping a close eye on the central bank, wondering if it will offer more quantitative easing or stimulus to help reboot the stalling economic recovery. On Wednesday, the Federal Reserve said it is considering additional stimulus moves as early as next month, actions Romney said won’t help.

“I don’t think QE2 was terribly effective, I think a QE3 and other Fed stimulus is not going to help this economy,” he said. “I think that is the wrong way to go. I think it also seeds the kind of potential for inflation down the road that would be harmful to the value of the dollar and harmful to the stability of our nation’s needs.”

So there you have it, if you had any doubt: Romney wants a Fed that considers inflation all seven of the deadly sins rolled up together, and would degrade the mission of monetary policy in reducing unemployment and sustaining economic growth even more than it’s been degraded by the Fed itself during Bernanke’s chairmanship. Considering the chronic goldbuggery of Romney’s running-mate, this would probably be the most reactionary administration with respect to monetary policy since Herbert Hoover’s.

You think a “fiscal cliff” threatens economic recovery? Just wait til we have cheerleaders for deflation in charge of monetary policy.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.