From Volume 38, Issue 18 of EIR Online, Published May 6, 2011

U.S. Economic/Financial News

Bernanke: We Need Less Government, More Inflation

April 27 (EIRNS)—Forget the "QE3 question" supposed to hang on "Helicopter Ben" Bernanke's first press conference; his message was blunter: Let's have more inflation and cut the Hell out of the Federal budget.

Bernanke left the door open for a "QE3" continuation of the huge bank bailouts on June 30 when "QEII" ends, while not saying what kind of bailout lurked behind that door. That was all he could do without setting off a firestorm of angry Americans' opposition to more Fed money printing for the banks, a firestorm which Obama's White House had signalled it could not cope with while dealing brutal cuts to Federal entitlements and programs.

Bernanke's priority in both the unusual press conference and the FOMC statement which preceded it, was to counterattack the true charges, including from among Federal Reserve bank presidents, that the Fed's money-printing policy has been fueling hyperinflation. His other priority was insisting that cutting the Federal budget deficit is America's "number one economic problem."

Bernanke repeatedly claimed that the hyperinflation—commodity prices have risen on average 150% in the past two years and 25% in just the first quarter of this year—was currently "very modest," "transitory," and caused by Mideast oil supply disruptions. The last is such an obvious lie, repeated several times, that one has to quote him directly, from the press conference: "Disruptions in the Mideast have constrained supply; that supply has not been made up. We will see that inflation will fall if the Mideast stabilizes." And in the FOMC statement, the Fed Board said, "Measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate."

In other words, Bernanke's Fed wants greater inflation.

But Bernanke only really broke out of Fed blather into emphatic speech, on the matter of cutting the U.S. budget. He was asked by Fox News whether he were "worried" about the Standard and Poor's ratings agency having declared a "negative watch" for U.S. sovereign credit. He welcomed it! "S&P didn't really tell us anything we didn't know. The great problem of our fiscal deficit is the most important economic problem we face. It is simply not sustainable. Hopefully this [S&P] will be an impetus to making the long-term reductions that must be made. It could be a goad to a constructive response."

Missouri: Another Showdown State

April 25 (EIRNS)—Various anti-labor, right-to-work measures are working their way through the Republican-dominated state legislature in Missouri. The Republican-led Senate has already passed legislation this month that would require public employees who are members of unions to give annual consent for dues to be deducted from their paychecks. But unlike Wisconsin, Indiana, and elsewhere, the Governor of Missouri is a Democrat who vows to veto the Republicans' measures. Pro-fascist Republicans, however, are boasting that they will have the votes to override any such vetoes. Will the targets of the anti-labor policies wise up this time, and mobilize for the Glass-Steagall weapon?

It wasn't until 2007 that the Missouri Supreme Court gave public sector workers the right to collectively bargain; and even so, the ruling has been unevenly enforced.

Gov. Jay Nixon and Teamsters general president James Hoffa addressed a rally in the state capital of Jefferson City last week, at which Hoffa noted that there is "a war on workers going on throughout the country." The Kansas City Star reported that Hoffa said the Missouri legislation was part of the same right-wing agenda that has led to restrictions on public employee bargaining in Wisconsin and Ohio and other anti-union proposals in Indiana and Florida. Will he, Nixon, and their constituents wage an effective counterattack?

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