By Yaël Ossowski | Florida Watchdog
ST. PETERSBURG — Always willing to take on President Barack Obama‘s fiscal policies, Republican vice presidential hopeful Paul Ryan explored the other side of the economic coin by criticizing the monetary policy of the Federal Reserve.
The Wisconsin U.S. representative portrayed the latest move from the nation’s central bank, a $40 billion per month mortgage bond purchasing program, as hurtful for middle-income earners, hoping to capitalize on the resentment many still feel about the depressed economy.
“When they do this to our money, it undermines the credibility of our money,” Ryan told the crowd at a rally Saturday in Oldsmar, 15 miles northwest of Tampa.
“This may help big banks; it may help Wall Street. But it doesn’t help the rest of us who worry about what it’s going to cost to fill the gas tank, to cool the house in the summer and heat it in the winter, and to buy food.
“We don’t need sugar high economics. We don’t need synthetic money creation. We need economic growth. We want wealth creation; we don’t want to print money.”
Since 2008, the Federal Reserve has pumped more than $2.75 trillion into U.S. treasury bonds and a sinking mortgage industry, a frequent point of criticism by Republican U.S. Rep. Ron Paul, who used the idea of “ending the Fed” as a plank for his 2008 and 2012 presidential runs.
But as Ryan attempts to convince voters that he and GOP presidential running mate Mitt Romney are the best for the economy, are critiques of monetary policy a true point of contention for the pair or are they hoping to attract the Fed-weary supporters of the Texas congressman?
“It’s rational for him to strike a populist chord with people in middle or lower class who are leaning Republican and don’t take a particular liking to massively wealthy people,” said Jack Chambless, professor of economics at Valencia College in Orlando.
“Wealthier individuals are going to be in a better situation to take on more debt at lower interest rates, as the Fed continues its irresponsible policies that continue to devalue our currency,” said Chambless.
Ryan has been on the record as a critic of the central bank, but has reserved his critiques to “simplifying its mandate to price stability,” he stated at a April 2011 town hall meeting in Paddock Lake, Wis.
The change in Ryan’s tone, about the big bankers and manipulation of the market, is more reminiscent of a populism employed over a century prior.
In elections past, economic populism normally centered on calls for increased government intervention in the market, favored by the very same down-trodden groups of middle-income workers that oppose it today.
“The economic populists of the 19th century wanted to have the government come in to act as a kind of equalizer between the very wealthy and the ordinary folk,” said Connie Lester, a professor of economic history at the University of Central Florida in Orlando.
“There existed a perception that those in the upper class were manipulating the market to their advantage, and they wanted government as an honest broker,” she told Florida Watchdog.
Lester said the creation of the Federal Reserve was brought about by a populist campaign, aided in part by the aligned interests of wealthy bankers in the Northeast.
“The Federal Reserve is very interesting in that there was clamor from both ends of the spectrum, farmers and the big money interests. The bank that they get probably reflects more the desires of the big money people,” said Lester.
“It’s only in the last 20th century that we came to the belief that government had to get out of the way for the market to work,” she added.
Nevertheless, Chambless said Ryan’s “new economic populism is more about bringing in voters than actually shifting the course of the nation’s finances, but laments that any focus will have lasting impact.
“Whether it’s the welfare state or this sense of entitlement, the American people are naturally favorable to easing the money supply and extending credit,” Chambless told Florida Watchdog. “I don’t think it’s going to do most good because the average American does not want to face the true facts.
“They don’t understand long-term consequences of short-term actions by the Fed, and they don’t care about how disastrous those long-term consequences will be.”
Ultimately, Chambless said true critics of fiscal and monetary policy will more likely turn away from the political system, despite the promises and rhetoric of politicians.
“People are naturally going to vote with their dollars,” said Chambless. “If Obama is re-elected, I think we’re going to see capital flight towards gold, silver and oil to offset Fed policy and shelter from damage done to economy in 2013, when we see these huge tax increases across the board.”
Yaël Ossowski is Florida Bureau Chief for Watchdog.org. Contact him at Yael@FloridaWatchdog.org.
— Yaël (@YaelOss) September 10, 2012