Tuesday, March 18, 2008

I Have Two Better Words for You...

My original reply to Pat's article about management was a bit of a tangent so I decided to give it its own space. On the subject of the falling dollar, I have two words for you: Helicopter Parent. That's what the Federal Reserve has become, and it's hurting us all. Here's a short description from the Wiki:

"A helicopter parent is a term for a person who pays extremely close attention to his or her child or children, particularly at educational institutions. They rush to prevent any harm or failure from befalling them or letting them learn from their own mistakes, sometimes even contrary to the children's wishes. They are so named because, like a helicopter, they hover closely overhead, rarely out of reach whether their children need them or not."

Tell me that's not what the Fed is doing right now with all these rate slashes. We as a country have borrowed WAY beyond our means and now that we have to pay for our mistakes, the Fed is swooping in to try and save us all from ourselves. I don't particularly mind them trying to prop up businesses like Bear Stearns because the Fed, Fannie Mae, and Freddie Mac have a lot to do with the current predicament and because of the way the Fed is handling it (basically co-signing loans from other companies instead of directly throwing cash their way).

But all this rate slashing in the face of a failing dollar? The Fed is so busy trying to stop a recession that they're not even looking at how the recession would play out. We're in this mess because of our borrowing, not our earning or unemployment. A recession now would force us to tighten our belts and likely jack up inflation. The second item is key because without inflation, all that money we borrowed is going to keep hurting us. If inflation were to catch up, it would be a bumpy ride but at the end of the tunnel we'd be left with manageable debt.

You can dislike Bush all you want, but the MBA from Harvard is in his element here and he's very right: "one of the worst things you can do is overcorrect." Inaction from the government is indeed the solution to our problem right now. Of course every time the Fed does something, he'll publicly applaud it because he has to but he's firing a public warning shot to the Federal Reserve that I hope they take notice of. The linked article reminds me of why I voted for him. Unfortunately, it also reminded me of why I rarely vote Democrat:

""Wages and home values are down," [Harry] Reid said, "but prices for everything from health care to tuition to energy are up. Just this week, oil and gas prices reached record highs while the value of the dollar reached historic lows. I hope the president, who has been slow to acknowledge this problem, joins us in recognizing how urgently we need a solution.""

We have a solution. Don't spend money you don't have. Now go out there and make it happen. Let's save the economy! After all, despite the howling you hear, we're not even in a recession.

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