Say Anything Blog

By Jeff Poor

Full title: Kudlow, Santelli: Dollar Devaluation Creating 'Façade' Bush/Obama Interventionist Economic Policies Are Working

Now that the Obama administration is attempting to take a victory lap on the U.S. economic recovery, claiming the $787-billion stimulus passed earlier this year was what did the trick, despite a cost of $160,000 per ‘stimulus’ job, as ABC’s Jake Tapper pointed out, it has come at the cost of the U.S. dollar.

Since then, the stock market has rebounded nicely. The Dow Jones Industrial Average (DJIA) is off a March low of 6,547 points, even topping the 10,000-mark recently. But what has caused this nearly 50-percent jump? According to CNBC’s Larry Kudlow - loose monetary policy by the Federal Reserve, with low interest rates, has made it possible for the markets to rise, with the ‘loose’ money going into the market.

“The funny thing is, Steven, it has gone into stocks - I mean the stock market guys ... there’s no real multiplier for the economy, right?” Kudlow said on his Oct. 30 CNBC program. “But it has gone into stocks and the stock market crowd wants to see the Fed to keep pouring the money in no matter what happens to the U.S. dollar.”

And CNBC’s senior economics reporter Steve Liesman agreed. But he warned that if policymakers were to intervene to shore up a weakening U.S. dollar, it would send the stock market down. However, Kudlow explained that a stable dollar would put confidence back in the U.S. economy - and that it would be good for stocks in the long run, while not causing the inflationary response associated with propping up a fragile economy by devaluing the U.S. dollar.

“Rick Santelli, what Steve’s got wrong is in the long run, a solid economy, a balanced economy, a non-inflationary economy with a solid dollar - doesn’t have to rise, just solid, stable - would be great for stocks.”

“Solid dollar, good fiscal discipline - the dollar and stocks would go up,” CNBC CME floor reporter Rick Santelli said.

[...]

And it’s not a matter of political affiliation, as Kudlow explained. Both President George W. Bush and Obama got it wrong. Who got it right? Presidents Bill Clinton, a Democrat, and Ronald Reagan, a Republican.
“The Bush administration was wrong about the dollar, I’ll say that again for the umpteenth time,” Kudlow said. “And this administration is wrong about the dollar and the last president to get the dollar right was Bill Clinton, who had it right, and Ronald Reagan before him.”

Obama’s insane economic policies are the worst thing that could have happened to an econonmy in a slight downturn; it sent it into the tailspin it’s in right now.  There is no recovery in the private sector, which pays for all the govt spending.
Obama’s weak dollar nonsense also has us paying much more for fuel than necessary, which is a big negative force in the real economy.