After more than two years of intervention in the economy by the Federal Reserve, the economy is showing signs of sliding back into recession. This, of course, is precisely what sober minds — like Congressman Ron Paul and financial analyst Peter Schiff — have been predicting all along. But it’s news to the likes of Fed Chairman Ben Bernanke, who on August 27 pledged to take whatever measures are needed to jolt the somnolent economy back to wakefulness.
When Fed Chairman Ben Bernanke speaks on Friday at the Fed’s annual meeting in Jackson Hole, Wyoming, Fed-watchers from around the world will be hanging on his every word, phrase, and nuance for clues. They’ll be listening to hear that the chairman knows what’s happening in the economy, and that if things get worse, he has a plan.
Think you’re scared enough about the economy, the ballooning deficit, and the prospect of ruinous tax rates and runaway inflation to pay for astronomical government debts? If you haven’t read Boston University economist Laurence Kotlikoff’s August 10 article for Bloomberg (“U.S. Is Bankrupt and We Don’t Even Know It”), you probably aren’t.
Cutting taxes is again in vogue in a Washington, D.C., increasingly dismayed by the utter inability of the massive Obama stimulus package to jolt the economy back to life. President Obama himself has become a grudging disciple of the Bush tax cuts, and is now advocating an extension of the tax reductions beyond their expiry at year’s end — but only for Americans earning less than $200,000.