United Liberty

The Federal Reserve, which has faced much criticism in recent years over its constant intervention in the nation’s economy, did something it hasn’t done in its 98 year history; it held a press conference. Ben Bernanke defended the Federal Reserve’s actions to reporters and alleviate concerns over inflation:

[Bernanke] mostly retraced familiar ground, and the markets rose only slightly as he spoke, suggesting that investors learned little of consequence, although the three major indexes ended the day strongly. The news was in the spectacle of a Fed chairman addressing public concerns on live television.

The central bank, so careful for so long to cultivate a sense that it was above politics, will now hold regular news conferences just like so many others in Washington, hoping to improve its image and build support for its policies.

Mr. Bernanke’s message Wednesday was that the Fed was doing all it could to spur growth and increase employment without causing inflation to rise. He said that inflation must take precedence over employment because inflation would result in job losses.

“While it is very, very important to help the economy create jobs and help to support the recovery, I think every central banker understands that keeping inflation low is absolutely essential to a successful economy, and we will do what we can to make sure that happens,” he said.

He spoke after the Fed lowered its projections for domestic economic growth in 2011, predicting growth of 3.1 to 3.3 percent. In January, the Fed had predicted growth of 3.4 to 3.9 percent, but Mr. Bernanke said that exports, construction spending and military spending had all been lower than expected.

Remember when Paul Krugman was against monetizing debt, hyperinflation and deficits. That was all before he became an apologist for the Obama Administration. Via Instapundit, Tom Maguire from JustOneMinute provides us with an example of Krugman’s hypocrisy.

Here is Krugman in March of 2003:

Last week the Congressional Budget Office marked down its estimates yet again. Just two years ago, you may remember, the C.B.O. was projecting a 10-year surplus of $5.6 trillion. Now it projects a 10-year deficit of $1.8 trillion.

And that’s way too optimistic. The Congressional Budget Office operates under ground rules that force it to wear rose-colored lenses. If you take into account — as the C.B.O. cannot — the effects of likely changes in the alternative minimum tax, include realistic estimates of future spending and allow for the cost of war and reconstruction, it’s clear that the 10-year deficit will be at least $3 trillion.

So what? Two years ago the administration promised to run large surpluses. A year ago it said the deficit was only temporary. Now it says deficits don’t matter. But we’re looking at a fiscal crisis that will drive interest rates sky-high.

A leading economist recently summed up one reason why: “When the government reduces saving by running a budget deficit, the interest rate rises.” Yes, that’s from a textbook by the chief administration economist, Gregory Mankiw.

But what’s really scary — what makes a fixed-rate mortgage seem like such a good idea — is the looming threat to the federal government’s solvency.

Jim Rogers tells CNBC something they rarely hear from their “expert” guests- that the economy needs to be left to itself to liquidate and that the result will be a future of more sustainable growth.