Sarah Palin Was Right #13: James Pethokoukis on 'Who lost the dollar?'

Reuters economic policy columnist James Pethokoukis:

In a recent Facebook posting, Palin expressed deep concern over the dollar’s “continued viability as an international reserve currency” in light of huge U.S. budget deficits.

She might be onto something here, politically and economically. A recent Rasmussen poll, for instance, found that 88 percent of Americans say the dollar should remain the dominant global currency. Now, the average voter may not fully understand the subtleties of international finance nor appreciate exactly how a dominant dollar has benefited the U.S. economy. But they sure think a weaker dollar is a sign of a weaker America.

And that’s the political problem for the Obama administration. Its benign neglect of the dollar is another example of an economic policy — along with TARP and the $787 billion stimulus — that the White House thinks is helping the economy, but many Americans find wrongheaded.

Read the rest of Pethokoukis' column here.

- JP

Welcome to the 1930s

At A Tangled Web, David Vance says the 1930s are happening again, thanks to a toxic mix of  "economic luddism and political incompetence":

The dollar is heading south, the deficit is heading north and Obamanomics are proving as ineffective as those [pursued] in the 1930's by FDR.

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As Sarah Palin points out the dollar decline is directly linked to rising US indebtedness and dependence on foreign oil. “We can see the effect of this in the price of gold, which hit a record high today in response to fears about the weakened dollar,”

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The neo-Keynesians are wreaking havoc and proving that they have learned none of the lessons of history. You just cannot spend your way out of a spending induced recession and yet Geithner and the gang imagine otherwise.

Indeed. As Vance points out, Both Hoover and FDR failed to get it right 75 years ago, and millions of Americans got stuck with the bill. 

"The Wizard of Oz" made it's screen debut in 1939, and we are most certainly not in Kansas anymore, TOTUS. But on a more serious note, the 1930s was a decade that saw the rise of fascism overseas, complete with massive military buildups by Germany and Japan. Despite those foreboding events, the prevailing desire for neutrality in the U.S. made it a sleeping giant which would only be awakened by Admiral Isoroku Yamamoto's daring attack on Pearl harbor which crippled the American Pacific Fleet.

- JP

NY Sun Editorial: Palin and Paul

The New York Sun? Yes, it's still around, though only on the world wide web. The Sun published it last print edition September 30, 2008. Here are some excerpts from its October 10 editorial:

Those of us who have been waiting for a politician to pick up on the monetary issue are perking up at Governor Palin’s demarche on the dollar. This came last week in a posting on her Facebook page, where she reacted to a report that Gulf oil producers were negotiating with Russia, China, Japan, and France to abandon the use of the dollar in pricing petroleum. She noted the report in the Wall Street Journal that Arab oil officials were denying the story, but reckoned that “even the possibility of such talk weakens the dollar and renews fears about its continued viability as an international reserve currency.” Then she pointed out that “a United Nations official called for a new global reserve currency to replace the dollar and end our ‘privilege’ to run up huge deficits.” Most importantly, she warned about the price of gold, which that day had hit a record in what she called a “response to fears about the weakened dollar.”

Time will tell, but what this suggests is that the former governor of Alaska is ahead of the rest of the undeclared contenders in 2012.  

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Mrs. Palin’s comments suggest she’s savvier than many give her credit for being. No sooner did she issue her warning about the dollar than Reuters found a number of Republicans declaring she was right.

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It is true that the only politician who has been campaigning on this issue, Ron Paul, failed to prosper at the polls. We would argue that had less to do with his monetary policy than other issues, the war among them, on which he has been in error. But maybe he should have been a bidder for that famous lunch with the former Alaska governor. We’re not ready to make endorsements, but Palin and Paul could make a whale of a ticket.

- JP