Actually, that title might be better the other way around: insanity has trumped stupid. In either case, the topic is the same: the so-called “monetary policy” of the GOP. Not surprisingly, it really isn’t a policy. It also has little to do with the monetary system and, of course, is just another talking point using their favorite gambit: fear.
It is seen most poignantly in various statements and speeches by Senator Rand Paul in which he warns of a coming slide in the value of the dollar and a linked hyperinflation. He likes drawing attention to the wildly inflated German economy just before WW II and hinting that if the Fed isn’t reined in we’re heading in that direction.
This is, to anyone paying attention, utter nonsense. The Fed isn’t doing anything other than keeping the economy humming along with sound adjustments in the money supply and interest rates. Inflation hasn’t even been hinted at since Obama took over — if anything it’s a tad lower than optimal. The dollar isn’t losing value. In fact, it’s gaining as Europe struggles with its self-imposed austerity mess and China’s growth slows. The dollar is what it has been for the longest time, the world’s strongest and most respected currency. In countries around the world the US dollar is the universal currency.
These facts are pretty obvious and tough to duck. When Paul spouts his nonsense at fairs, townhalls and other gatherings of the tea party believers it works because they don’t know any better and seem to take such pleasure in being frightened.
But with the folks who see how empty these claims are more is needed. It’s supplied in the most astonishing manner: the government, the new conservative claim goes, is cooking the books. The inflation rate isn’t low, it’s soaring but they’ve buried the true data. The fact that these numbers about inflation aren’t produced by the government but by independent agencies seems lost on them. The story here is too weird and too long. Go to this piece in the Washington Post for an explanation.
But listing these tidbits of silliness isn’t enough. You have to ask, if the GOP’s position is idiotic and, alas, trumping the merely stupid, why are they doing this? Why claim the government is lying when there’s no suggestion of this anywhere but in the minds of right-wing paranoids? Why warn constantly about inflation when there’s not even a hint of it? Why worry about rising interest rates when they’re at historic lows? Why demand the break-up of unions? Why crusade against Social Security? Call for reductions in the size of government? Campaign against raising the minimum wage? Vote to repeal the ACA? Insist on reducing business taxes? Inheritance taxes? Taxes on the top earners?
Krugman got close to an answer in a recent column: to a conservative “… markets aren’t just a useful way to organize the economy; they’re a moral structure.” And that, sports fans, is the key. As we’ve pointed out before, this kind of clinging to an outmoded moral framework contaminates conservative thinking on issues like women’s health, abortion, gambling and education. It is why conservatism, stripped of its genteel veneer, is ugly, destructive and regressive.
Each of the sensible, viable and effective moves that the Fed makes offends. Even the thought of a stimulus package, or the government buying up bonds or increasing the minimum wage gives them headaches. They still live in a world where money is something that sits in a bank, backed by gold or other precious metals, where your worth is based on your accomplishments, what you built — and think you did it wholly on your own.
But modern monetary policy, the real thing, the economic principles that do, in fact, determine how the world’s economy operates doesn’t operate that way. It uses paper or statements about money in digital formats. Cash is worth what it is because of the faith in the government that backs the paper. It is faith and belief, these make up the glue that holds it together. The conservatives, with their commitment to the antiquated gold standard seem to have forgotten that it is always faith and trust. Gold has value because people believe it has value. Any bartered product has value when those involved in the exchange share the faith and belief in its value.
The Randians of the right (Paul and Ayn) cling to an outmoded, unworkable view. The fact that it is obvious that they’re wrong and that the neo-Keynesian model is far better has no impact on them because they’ve been captured by the same seed they sow: fear.
The deeper irony is that if they were to gain power and impose their broken economic models on us they would get precisely what they fear.