On 2010-11-19, at 5:41 AM, Michael Pollak wrote:
> By PAUL KRUGMAN
>
> ...but the core reason
> for the attack on the Fed is self-interest, pure and simple...Republicans want the
> economy to stay weak as long as there's a Democrat in the White House.
While Krugman's right that the Republicans want to score political points, I doubt the "core reason" they're attacking QE2 is, as he says, for fear it's going to work. Few commentators across the political spectrum think the Fed bond buying will amount to much - Krugman among them. Only last month, he said the Fed would need to spend no less than $10 trillion (!!) to turn the economy around. Most everyone agrees the planned $600 billion will add little to US efforts to push the dollar down against the yuan and other currencies, to boost US exports, and to reflate the economy at home. If these trends materialize, deeper forces in the global economy will be responsible.
So it's an easy issue for the Republicans. They've historically represented creditors rather than debtors as the strong dollar party. They're more responsive to the big US multinationals which export back into the US from overseas who don't have the same interest in a cheaper dollar as do uncompetitive US domestic manufacturers where the Democrats' industrial union base is concentrated. And the party elders, not least, can use the issue to mollify and head off the Rand Paul led tea party base which wants to abolish the Fed.