Vail Daily letter: Obama should look inward
Avon, CO Colorado
Obama’s recent speech vilifying the oil and gas industry and laying blame as to the cause of high gas prices is yet another example of abusing of his post for political ends. In reality, Obama only needs to look at his own failed economic and foreign policies and loose monetary policy at the Federal Reserve as the culprits.
The failure of the $800 billion stimulus package led the Fed to employ quantitative easing, otherwise know as QE2, to stimulate economic growth. Quantitative easing is long hand for “printing money” as the Fed bought back roughly $600 billion of U.S. Treasurys over the past year. This action by the Fed has driven short interest rates to practically zero, driving a flight of capital out of the dollar and into riskier assets such as emerging markets and commodities. Hence, the U.S. dollar has declined over 8 percent in the past year and commodities (including oil) have soared.
Investors are driven by the best return of their capital. If they’re not going to be rewarded for saving in this country, they will go elsewhere. The decline in the dollar has benefited U.S. export-driven companies as the prices of their goods are more competitive overseas. That’s why U.S. companies focused on markets abroad have seen record earnings recently. In the meantime, the American consumer has to pay more for imported goods, oil being one, as devaluation imposes a “tax” on the consumer. On the supply side, waging campaigns in Libya and disrupting oil supplies doesn’t help the situation either.
Obama should dismiss his anti-business rhetoric and focus his attention on fiscal policy, with priority No. 1 being debt reduction and fiscal restraint.