United Liberty

Over at Cafe Hayek, Don Boudreaux responds to Ben Bernanke’s editorial from the Washington Post:

I had to down an extra mug of coffee this morning to be certain that I read your op-ed in today’s Washington Post correctly.  Sure enough, you claim to be worried about a recent House-committee vote to, as you say, “repeal a 1978 provision that was intended to protect monetary policy from short-term political influence.”

Ummm….  What guided Fed “policy” over the past couple of years if not short-term political influence?

Working hand-in-glove with the political branches, you now have the Fed performing activities – such as direct lending to what, in an April 2009 speech, you called “ultimate borrowers and major investors” – that are utterly outside of the Fed’s traditional role.

As my colleague and celebrated monetary historian Larry White wrote earlier this year, “The Fed’s new activities deserve to be called a bailout program because they seek to channel credit selectively at below-market interest rates, or purchase assets at above-market prices, in hopes of rescuing, or enhancing profits for, favored sets of financial institutions.  The Fed’s new lending facilities are not parts of a central bank’s traditional ‘lender of last resort’ role.”

Sorry, Mr. Bernanke, any independence that the Fed might have once had from “short-term political influence” has already been trampled to death – chiefly by you.

Christina Romer, a White House economic advisor, says we’ve already seen the biggest impact from the so-called “stimulus”:

A top White House economist says spending from the $787 billion economic stimulus has already had its biggest impact on economic growth and will likely not contribute to significant expansion next year.

Christina Romer, the chair of President Barack Obama’s Council of Economic Advisers, said Thursday that the $194 billion already spent gave a jolt to the economy that contributed to growth in the second and third quarters of the year. She told a congressional panel that by the middle of next year, the impact of the stimulus will level off. Romer said spending so far has saved or created 600,000 to 1.5 million jobs but warned that unemployment will remain high, above 9.5 percent, through the end of 2010.

So, uh, that’s it? Weren’t we told that unemployment would not rise above 7.9% and that this spending, funded entirely by debt, would create millions of jobs? Well, we’ve lost a lot more jobs than with the stimulus than the Obama Administration said we would. Any talk of job creation from this spending is an empty talking point that isn’t backed by reality.

As you can see below, unemployment is almost 2% higher with the stimulus bill. Since the beginning of the year, a couple millions jobs have been lost.

As thousands of car owners trade in their old vehicles under the “Cash for Clunkers” program, charities fear they will see a decrease in the amount of old cars that are donated for people who cannot afford them.

USA Today reports:

Charities across the country are concerned that the popular “cash-for-clunkers” program will entice people to junk old cars for credit toward new ones rather than donate them.

“We know there’s going to be a significant impact,” says Chad Iseman, director of the Kidney Cars program for the National Kidney Foundation. Iseman says the foundation gets about 19% of its annual revenue from selling donated cars. The charity said it estimates a 10% to 15% decline because of the federal rebates.

Of course, media outlets were shouting everywhere what a success the program was, but few took the time to check (bless you USA Today) for a little thing called unintended consequences.