Jeffrey Lord says Obama is toast — because of the price of bread. Key bit:
WHAT SEEMS TO HAVE LEFT Obama strategists clueless is the fundamental historical fact that inflation comes slowly. Milk today, celery tomorrow, and gas almost every day. Then, too late, there’s a collective gasp of recognition by Americans walking around the grocery store that it’s no longer just the milk and the celery but the soup, the chicken, the hamburger and perhaps now critically — the Excedrin. Don’t forget the rent, either. The shock of realization dawns that somehow the patient — America — is suddenly in dire economic health and the only way out is a brutally painful form of political surgery.
Lord makes many comparisons between today and 1979, and they’re all apt — especially regarding the two men occupying the Oval Office then and now, and their economic policies.
But let us look ahead a little further.
Ronald Reagan came into office in January, 1981, on a mission to get the economy moving again. The first step was — the first step had to be — to choke off inflation. And in cahoots with Fed Chair Paul Volcker, that’s exactly what he did. Their recipe was simple: Tight money, high interest rates.
Please note that since the mid ’90s, the Fed has gone with low interest rates and easy money — and look at where we are today. Let’s be a bit nicer to Alan Greenspan. While the Maestro had an easy money policy, his successor Ben Bernanke has pursued a policy of absolutely slutty money.
“Slutty money.” There’s your water cooler phrase for the week of 4/25/2011.
Here’s the first problem the next administration faces trying to tame inflation.
In 1980, the deficit was just $74 billion — or $154 billion in 2005 dollars. That’s one-fifth the size of this year’s deficit. Per capita, it’s four times bigger.