It would be a mistake if readers inferred that I spend an inordinate part of each week staring incredulously at television screens, as my comments last week, and my remarks here about the quality of economic reporting, might indicate. I don’t watch television often or lengthily, but it is true that apart from classic movies and some history and nature programs, I am usually more or less horrified at what I find when I do watch it.
There are serious and competent people, such as Peggy Noonan, who claim to take some comfort in the quality of American television, and they almost certainly have greater exposure to it than I do. But among my more dispiriting experiences is when I embark on a complete surfing of the hundreds of accessible television channels. The inane talk shows, mouthy and platitudinous commentators, news programs that convey only pap about health, food, and social work, corny sitcoms, mindless violence, ham acting so implausible that drama verges on slapstick, punctuated by screamed interruptions of advertising — it is all a worrisome comment on the state of public taste. And, contrary to widespread belief, it is not markedly better in other countries, though British historical programming is usually very good, and Canadian television news is superior to America’s.
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This is of a piece with American television’s usual standards of explanatory journalism. I watched almost gape-mouthed at what CNN represented as an analysis of high gasoline prices this week. The implications for the president’s popularity were laboriously explained. But at no point in this exposition did the fact that the U.S. federal government has run up deficits of $3.5 trillion in the last two years, in a country that had a money supply of a little over $1 trillion at the start of this fiscal orgy, rate a mention as an explanation of why commodity prices are rising. (This is a 32 percent increase in the deficit — 27 times the historic level of federal-deficit increases in the entire history of the country before the onset of the Obama economic miracle.) We cut to Speaker John Boehner, who said a surtax on the income of oil companies would be considered.
The day before, I had seen an experienced interviewer on the same network ask the secretary of transportation about skyrocketing gasoline prices, and receive the halcyon assurance that “all hands are on deck” to deal with it. No CNN person in these different segments asked or said anything about the implicit theory that the world’s petroleum- and commodity-exporting countries were to sit as mute as cigar-store Indians while the value of the dollar was eroded as a matter of policy, to prevent deflation. Inflation will prevent deflation, but is not a lesser evil. A very large number of observers outside the U.S., and a great many economically literate Americans, think that the Treasury and the Federal Reserve have engaged in madly excessive money-supply increases through federal spending, and that traditional inflation from too much money chasing too few goods is inevitable.
In the 27 months of the Obama administration, there have been spectacular rises in the prices of gasoline ($1.83 per gallon to almost $4), oil ($41 per barrel to over $90), gold ($853 per ounce to $1,500), corn ($3.56 per bushel to $6.33), and sugar ($13.37 per pound to $35.39). The real median household income has declined by $300, to under $50,000; the number of food-stamp recipients has increased from 32 million to 43 million; the number of people officially in poverty has increased by 10 percent, to 44 million (more people than the whole populations of Poland or Spain); the ranks of the long-term unemployed have increased from 2.6 million to 6.4 million; and the U.S.’s position in the rankings of economic freedom of the world’s countries has declined from fifth to ninth. I have admitted that my canvass of television news and comment is sketchy, but I have seen almost no reference to any of these problems except the prices of oil, gold, and gas.
Federal Reserve chairman Ben Bernanke is an undoubted academic expert on the economic history of the Great Depression. And he is doubtless correct that the Depression would have ended more quickly than it did if Roosevelt had been able to spend more and pump the prime more vigorously. Mr. Bernanke, in deference to his position and undoubted academic qualifications, has been given the benefit of the gigantic doubts that exist about his policy, including the latest foray into outer financial space with “quantitative easing 2,” in which $600 billion has been spent buying Treasuries to put money in the pockets of those who might spend it. The whole design of the policy — the incitement of profligacy by the profligate — was mad, and there is now, finally, after much noisy and orchestrated worrying from abroad, real concern that the intended solution just aggravated the problem.
Too much paper currency floating around + bank customers up to their ears in debt + twice shy banks = slow recovery + inflation.
If TCM re-runs an old Bogart Movie or a 1940's flim noir classic the odds that I turn the remote on increase. If it is Casablanca or Maltese Falcon the remote is activated. I survived the gas rationing in the 1970s. Green flag you fill up. Yellow flag come back tommorrow. Some stations would only allow the regular customers to gas up at prices regulated by the EPA. That was in Texas where you could see the oil dericks in Midland-Odessa pumping out the crude. Those were the days.
"Gas prices are rising for a reason," trumpets the NRO subhead, "and it's not the oil companies."
Sometimes you can't be NRO for irony.
What does Conrad Black blame for rising gas prices? Read his answer. He doesn't say, he only implies, unless the NRO subhead is just some inapplicable mistake. What do you think? Was the headline writer at NRO just misreading Black's column, or does the cause have something to do with America's precarious economic position?
Then read the adjacent piece by Victor Davis Hanson. What does Hanson blame for rising gas prices?
No, MikeB, it appears you aren't the one that gets it. Both men are pointing to US policy as the main determinant in driving up prices. What is "US policy" in relation to energy? Well, the first is monetary policy whereby commodities - oil, specifically - is priced in dollars. If you have a loose monetary policy that negatively impacts the price of oil as countries that sell oil - not just oil companies - will demand a higher price as they have noticed that they are getting less in terms of the value of the dollar.
The second is US energy policy. America - and specifically this administration - has made a conscientious effort to restrict the energy supplies in this country in the pursuit of foolish alternative energy sources. Perhaps you should read Jonah Goldberg's article, which nicely sums the inanity of this pursuit even as "climate change" has sunk so low in the polls with Americans.
Both men are arguing the same point and have reached the same conclusion: it is US POLICY, both monetary and energy, that is responsible for the rise in gasoline prices, not the evil "oil companies" which are players in the market, not policymakers. The irony is that people like you continuously blame the oil companies as the culprits.
Actually FDR's own treasury secretary declared that the attempt to jump start the economy had been an utter failure, and that failure had nothing to do with not spending enough money.
MikeB: I don't know if you really are that dense, or if you just enjoy appearing that way.
Mr. Black did indeed indicate why he believes oil prices are rising. The collapse of the dollar because the fed has kicked the printing presses into high gear.
@MikeB: I presume you support the Obama-Chu Energy policy? If so, please do enlighten us as to why it makes sense to financially back Brazilian deep water drilling while refusing to permit drilling off our own shores or even on land in North Dakota. We're told by Obama that it is necessary to build cars with higher MPG ratings to put more supply in the system thus driving prices down. Yet this is the same Obama who's EPA just shut down a major Shell project in Alaska. Which is it? Do we or do we not need supply?
I agree with all those citing monetary policy and have for a long time. I'd suggest we determine inflation using the older pre-Clinton era formulas. From what I've heard, using that standard the true inflation rate is between 9% and 11%.
Great article. Long overdue. Should be linked far & wide (in which endeavor I shall try to do my part.)
I have long wondered what, exactly, journalism schools teach, since most general-purpose journalists and, as Mr. Black discusses, the media taken as a whole, display little-to-no knowledge of economics, finance, or history, especially political and military history.
You can read on Drudge today Exxon profit was 2 cents/gallon and they were already taxed $10 billion in 2010. Obviously any tax rise for Exxon will immediately translate into concomitant rise in gas price, which we do not need! Also the toxic anti-business/rich atmosphere induced by the administration and the by-proxy media only serves to push valuable national industries ‘off-shore’ thus resulting in less jobs, resources and tax revenues.
The media doesn’t get it or they do and are willfully distorting facts. Thus they are idiots or left wing propagandist tools. If trend continues or the electorate remains more interested in entertaining style over substance, either result portends a bleak outcome for America.
Chrisbolster has it right. Let's also add to the government impact discussion the fact that the mandate on ethanol raises the cost of fuel due to its impact on corn prices as well as the increased cost of transportation (can't use pipelines). We use fuel to grow fuel and transport fuel making fuel more expensive. It can only make sense to a liberal.
Well, Black almost lost me when he said Noonan was competent. Serious, maybe. Competent? Not to me. Credulous? Yes. Nonetheless, I continued reading.
Overall, not bad, but it seems Black cannot write something without whipping that tired old horse "FDR pulled the country out of the depression."
MarkW, it's funny (in a schadenfreude sort of way), and much more convincing than Morgenthau's (I hope I spelled that right, don't want Mike embarrasing me again) comments, to look at GDP and government spending simultaneously during the 30s. You'll see that the greatest nominal and % recovery in GDP occurred in 1934, before goverment spending had increased from previous levels. That started in 1935. After that for the rest of the 30s it meandered and in 2 years, dropped precipitously. 1934 was, by the way, the year the FDIC was instituted. One of the few government programs that worked, to keep people from running on the banks.
Now Mr. Black, and perhaps Mike, will both say "GDP went down because FDR tried to balance the budget." which in Mike's case, would be another worn tool from the liberal shop. Of course, the same graph will show that government spending didn't go down but increased at the same rate in those 2 years (37 and 40 I think, memory again. Mike, can you check that out for me?)
FDR tried to balance the budget by increasing the tax rate!
Underwhelming Mike, I await your reply with bated breath.
I think it's great that the left blames gas prices for Bush's reelection.
As far as I can tell, Dan Rather was the driving force behind Bush's win over Kerry. Had Rather fact checked at all, he wouldn't have broadcast false documents.
"We cut to Speaker John Boehner, who said a surtax on the income of oil companies would be considered."
Can someone please stop the Speaker from the "me-too" habit of giving the opposition the rope to hang him. Either that or relieve him of his post? I've heard that the context of his statement suggested a willingness to accept certain tax increases on oli companies in return for lower corporate tax rates in general, but surely he must know that 1) it wonh't be reported that way by the sycophant media (especially if you use the phrase "fair share") and 2) he won't get those concessions from Obama.
JoeWI: Regarding the FDIC, while FDR was gov. of NY, several insurance companies went to him for permission to start issuing private deposit insurance. (Yes, even then, back in the era that liberals keep telling us was full of unchecked capitalism, insurance companies were heavily regulated by state govts)
FDR told the insurance regulators to deny the application because he was, at the time, trying to get a bill through the NY legislature to get state govt run banking deposit insurance.
I don't know what it is about liberals, but it seems as if they have an almost congenital resistance to any information that doesn't fit into their world view.
Reporters have no knowledge of how the economy works, they just keep repeating over and over again, old nostrums about how business people are greedy and that only govt keeps poison out of food and children out of industrial machines.
Despite the fact that such claims are easy to refute and their are countless examples that prove them wrong. Business bad, govt good, is the meme they grew up with and no matter how many times you show them evidence to the contrary, the next time they do a report, it's as if they had never talked to you at all.
I'm having a debate with redfate down in the global warming thread from a few days ago. He insists that AGW is a proven fact, it's serious, and we must do something drastic now if we want to save the planet.
I've posted link after link to studies that refute this, but he dismisses them without even reading them because they don't come from one of "approved" sources of information. Those sources being the same groups that invented this particular little scare to begin with. He even tried to push the latest IPCC report as being the conclusive answer on the subject, despite the well publicized mistakes and flaws in that document. It says what he wants to believe, therefore it is true.
How, exactly, is our refusal to do anything to increase the supply of any commodity going to help increase the supply and/or reduce our cost for that commodity?
How, exactly, is our contribution to the increase in the supply of any commodity NOT going to help increase the supply and/or reduce our cost for that commodity?
