State of the Union

State of the Union Address Conveniently Ignores Monetary Policy

|

Last night's State of the Union address made no mention of monetary policy. It did not include the following words even once: monetary, Federal Reserve, inflation, inflation rates or Treasury.

Come to think of it, Obama has never mentioned those terms in reference to monetary policy during any of his State of the Union addresses.

Bernanke Dollars
Credit: Gage Skidmore/foter

Obama devoted a large portion of his speech to the economy, and rightly so. He referred to consumer confidence, budgets, and the burden of higher priced goods on households. But ignoring the essentials of monetary policy shouldn't sit well with anyone.

Leaving out monetary policy from his address gives Americans an incomplete picture of our road to recovery.

Perhaps Ben Bernanke, Timothy Geithner, or Lawrence Summers—each of whom were appointed to various positions in past administrations and have all been involved in the financial crisis—deterred him from learning about it.

But Obama has economic advisors, the Federal Reserve's Board of Governors and other employees of the Treasury Department at his disposal, so intimidation is no defense.

Not confronting monetary policy allows Obama to ignore the monopoly that government has on the creation of money. It doesn't force him to remember that our money is not backed by anything but the faith we have in it. By ignoring monetary policy, Obama is showing that he doesn't grasp that faith is not a sound backing for a nation's currency. But Obama used the word "faith" three times last night. The very first time is by far the most interesting:

Let's agree—let's agree, right here, right now, to keep the people's government open and pay our bills on time and always uphold the full faith and credit of the United States of America.

So we will restore faith and credit when we "pay our bills on time" with money that isn't backed by anything? If that's the case, it seems like we're just handing out watermarked IOUs.

Why can't we use a currency that not only fulfills the three essential criteria of money but also lives up to the standard of having the real full faith of the American public behind it? Allowing currencies to compete gives market participants a choice in which currency they have "full faith" in because it serves its functions and accounts for individual preferences, asserting its soundness.

Advertisement

NEXT: Anonymous Unable To Block State of the Union Livestream

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. State of the Union Address Conveniently Ignores Monetary Policy

    No it didn’t. It hit monetary policy head on.

    “We will spend forever and ever, amen. Free stuff!”

    1. That would be fiscal policy, only being enabled through a reckless Fed.

      1. Fiscal policy, monetary policy, these are trivial details to an administration with a vision for the future.

      2. It would be solely fiscal policy if the Fed weren’t buying so much debt.

  2. The reason he doesn’t mention monetary policy is pretty simple: he doesn’t understand it. The man is as vapid, shallow, and intellectually blank as they come. Dealing with the humdrum world of numbers is simply beneath a man of his “vision.” He’ll never mention anything about monetary policy because it baffles him, and he is too vain to ever accept that there is something he is in the dark concerning.

    1. I am sure that you are right that Obama knows about as much about monetary policy as Tony or Shrike.

      However, I don’t expect technical discussion of monetary policy because people who pay attention to “addresses” don’t know shit about things like interest rates and inflation and treasury bonds. Hell, most Obama voters can not even figure out taxation- hence “tax the rich” and such.

    2. You’re a fucking idiot. The fool who doesn’t understand monetary policy is the recently departed House Chair on Monetary Policy who proved his ignorance during his one and only Fed investigation:

      http://www.dailypaul.com/16640…..-6-1-200pm

      The “doctor” got his misinformation from the crackpot who wrote ‘Creature from Jekyll Island’.

      I know – hyperinflation will hit us any second now!

      1. Yes, shrike (and this goes to Tony too) if you don’t think the money supply should be managed by an elite group of TOP.MEN you’re just a kook. And the fact that the entirety of your focus is on price inflation shows how little you understand the arguments Ron Paul and libertarians actually make

      2. So why have prices risen even though real estate collapsed?

        1. Prices haven’t risen except for gold (which is in a bubble).

          Oil/coal/natgas combined are below a five year moving average.

          1. You really think gold is in a bubble? So you predict it will pop and the price (in dollars) will plunge? Absurd.

            It won’t go below $1200 likely ever again. I can’t see it going below $1400 for at least a few years.

          2. And those are the only goods in existence? And you had to combine them? And, as I mentioned above, Ron Paul and other libertarian economists don’t base their fundamental arguments on price inflation. You still have no idea what they actually claim.

            1. Supply and demand are what counts.

              Crude was $147/bbl in mid 2008 and crashed to $33/bbl by year end.

              Was that due to monetary policy? Of course not. The underlying costs did not change.

              It was pure fear in the market. Which is fine.

              I care about markets. Buyers and sellers do too.

              Goldbugs make up less than 1% of the market mindset. You don’t really matter.

              1. With every post, you confirm everything we’re saying. You completely miss the forest for the trees. Sure, supply and demand play a huge role in determining prices. But inflation pushes those prices (both the high and the low end of the swings, not to mention general prices for non-commodity goods) up, especially in the long run. And I’ll say for the third time, price inflation is NOT the central focus of libertarian economics, even within purely monetary matters. But you still haven’t gotten that after all these years

                1. Milton Friedman agreed with him.

                  1. Friedman is not the only libertarian economist ever, and even he said the Fed should be abolished, which PB is not in favor of. Ron Paul (who PB attacked, which is what prompted this discussion) is not a Monetarist in any case.

              2. Re: Palin’s Buttwipe,

                Crude was $147/bbl in mid 2008 and crashed to $33/bbl by year end.

                Was that due to monetary policy?

                Gold also went down during that period, and then went back up along with oil. Is that due to monetary policy?

                The butt from whence you’re wiped will say “You betcha!”

                Of course not. The underlying costs did not change.

                Of course not. What changed was the rapid asset deflation after the market tried to find the proper asset value level. In the meantime, all the funny-money that was lent, backed up by those artificially-inflated assets, simply went bye-bye. That is why it is called a “correction.”

                Just because there’s a correction does not mean inflation didn’t happen, you moron. It is not like the two cars embedded into each other always existed in that condition – there WAS a crash previous to that. Same with the short deflationary process after the housing bubble.

                Goldbugs make up less than 1% of the market mindset. You don’t really matter.

                Let’s say that such is the case. What does that have to do with the fact that the Fed is inflating the money supply?

        2. What evidence do you have that prices have risen?

          1. Re: The Derider,

            What evidence do you have that prices have risen?

            Sometimes I wonder if you’re a real person or just a pecking bird going at it against the keyboard…

            It’s difficult to discern because of the bizarreness of your question. Unless you happen not to buy food or clothes, then I have to go with the pecking bird theory to explain you.

      3. Stop pretending you know shit about anything, never mind monetary, fiscal, and regulatory policy. You don’t.

      4. Re: Palin’s Buttwipe,

        I know – hyperinflation will hit us any second now!

        Buttwipe, ladies and gentlemen, the imbecile who still believes that “inflation” means “higher prices.”

        1. That’s what it means, dude. Higher prices and lower purchasing power.

          1. Whether or not you agree, higher prices relative to what they were x number of years ago is not the crux of the Austrian view of inflation. The fact that PB still doesn’t get this, and nonetheless uses the same straw man arguments is why he gets the response he does

          2. Re: The Derider,

            That’s what it means, dude. Higher prices and lower purchasing power.

            Just like your explanation for the digestive system must be “make poo-poo.”

            Pecking bird. Must be a pecking bird hitting the keyboard.

  3. Libertarian rag conveniently ignores 100 years of economic theory.

    1. Fuck off, moron.

      On an actual relevant note, did Obama actually say “the people’s government?”
      That is creepy.

      1. At least he didn’t call it The People’s Republic.

      2. The constitution starts with “We the people.” Ooh scary.

    2. The key word being ‘theory’.

    3. We prefer economic fact, and economic laws.

    4. Libertarian rag conveniently ignores 100 years of economic theory.

      That spending is saving! The USSR agreesd!

    5. T o n y casts his net and lands five fish.
      Not bad!

      1. Copernicus changed what we thought to be true once, therefore I’m right.

        Logic!

        1. Coming from a guy who’s arguing that someone is wrong just because they disagree with a 100 year old theory in a soft “science” like economics, that is rich.

          1. I meant 100 years of development of the field of economics. So the correct analogy would be that libertarians are stuck in a pre-Copernican world.

    6. Re: Tony,

      Libertarian rag conveniently ignores 100 years of economic theory.

      Just like modern physics conveniently ignores 100 years of phlogiston theory.

      Crackpot economic theories based on continuous-variable equations that purport to model human behavior will still be crackpot economic theories whether brand new or 100 years old.

      And please, go back to your embroidery, my dear, and leave the boring conversation to us men.

      1. Except that no physicists believe phlogiston theory, whereas 99% of economists advocate some sort of monetary policy.

        Who’s the most famous monetary economist? Milton Friedman.

        1. Re: The Derider,

          Except that no physicists believe phlogiston theory, whereas 99% of economists advocate some sort of monetary policy.

          Well, economists believe that NOW, just like physicists used to believe in phlogiston back then. Just give it time – people DO come to their senses.

          And I still believe I am talking to a pecking bird that is pounding at the keyboard. There’s no real intelligence back there… none that I can see… Hmmm. Hello? Knock-knock…

  4. So we will restore faith and credit when we “pay our bills on time” with money that isn’t backed by anything?

    Apparently Vera has never glanced at the Fed balance sheet. There are trillions in real assets on it.

    1. Define real.

      1. Real shit.

        1. IOUs to one’s self is such a tangible asset, isn’t it?

      2. Won’t quibble about the definition/

        There are $2.5 trillion in fixed rate bonds.

        1. The bond discussion again? Who’s backing those bonds?

          1. Taxpayers.

            Go ahead and revolt. Seriously – you first. They will pull your charred body out of some cabin soon.

            Which points to the real culprit – taxation.

            1. So the government can print up all the paper it wants, and as long as it’s nominally backed by “taxpayers” you don’t see a problem with that?

              1. What will happen if “taxpayers” come to agreement that no one will be responsible for paying that shit? Nothing. Whoever is “owed” something, it will be their own damn problem for being so stupid.

              2. It is the Treasury printing the “paper” that is most disturbing. Not the Fed.

                9/10s of US debt is held by those other than the Fed.

                1. You still dodged the question. And while the Fed doesn’t literally print paper, they can add zeroes to bank accounts to create the same effect

        2. Go ahead and purchase all the government paper you wish to.

            1. Why would that be?

              1. It is determined at auction.

                1. You definitely are clueless!!

    2. Dipshit actually posted this: “Apparently Vera has never glanced at the Fed balance sheet. There are trillions in real assets on it.”

      Yes, and none of them backs the dollar, asshole.
      Go screw your dad.

      1. Save in Euros, gold, sticks, or Pesos then. You have alternatives and no else gives a fuck.

        1. Palin’s Buttplug| 2.13.13 @ 5:55PM |#
          “Save in Euros, gold, sticks, or Pesos then”

          So you admit lying? Good.
          Go screw your dad.

    3. Re: Palin’s Buttwipe,

      Apparently Vera has never glanced at the Fed balance sheet. There are trillions in real assets on it.

      “Real assets” as in “I’m a total moron that really believes that bits in a computer represent real stuff.”

      By the way, my battle awards in Call of Duty BO2 are real battle awards.

  5. When does monetary policy ever come up in a SOTU speech? When does it ever come up in a TV interview of a politician? Or on a cable news panel of talking heads? It’s just not discussed.

    1. The wizard doesn’t mention the man behind the curtain until Toto pulls it back.

    2. The typical person I can think of who would watch the state of the union bullshit would probably stare blankly upon hearing unfamiliar terms in the most basic discussion of monetary policy.

      It would be a good thing to uncover new concepts to people, but this would require someone speaking who actually knows something about the subject.

    3. Ya. Only racists and anti-semites care about what the Fed does. It is known.

    4. Inflation was a big campaign issue during the postwar era until Volcker tamed it in Reagan’s first term.

      The influence of the Fed was heavily discussed in the GOP primary debates and speeches, and not just by Ron Paul — the other candidates zeroed in on it as red meat for the base. Disappeared for the most part during the general election, of course.

      1. And Volcker supports Obama’s policy.

        1. Re: Palin’s Buttwipe,

          And Volcker supports Obama’s policy.

          Wow, comparing something that Volcker did against something he’s just saying now. One of these things is not like the other! La-la-la!

          By the way, Buttwipe – talk is cheap.

          1. Volcker tamed inflation by USING MONETARY POLICY YOU MORON.

            1. Dude, if the Fed alternated between inflation and deflation, or kept things at an equilibrium, I wouldn’t have a problem with it. But that’s not what they do dipshit. They continuously run the presses, and we have a steady inflation of the currency.

            2. Inflation that was caused by monetary policy in the first place. Convenient that you leave that out.

              1. Re: Calidissident,

                Convenient that you leave that out.

                He left that out because he’s really one of those pecking birds, pounding at the keyboard.

            3. Re: The Derider,

              Volcker tamed inflation by USING MONETARY POLICY YOU MORON.

              Of course he did, pecking bird! What else could he do?

              But you did read the whole thread where the Buttwipe came back with the non-sequitur “But Volcker hearts Obama!” as if his opinion contradicted the results of his previous actions?

              Knock-knock! Hello? Pecking bird?

  6. Faith is confidence in what we hope for and assurance about what we do not see.

    — Hebrews 11:1

    I sure as hell don’t see how the US govt can pay back its promises, so it fits.

  7. “So we will restore faith and credit when we “pay our bills on time” with money that isn’t backed by anything?”

    Vera, you need to read a book. It’s called “The Wealth of Nations,” and it’s by this dude named Adam Smith. Until you read that book, you really shouldn’t be blogging for Reason, because you make Reason sound kind of, you know, stupid.

    1. Re: Anal Vanneman,

      It’s called “The Wealth of Nations,” and it’s by this dude named Adam Smith.

      Quick! Bandages! The crackpot just bit its tongue and is hemorraging!

      1. Stupid goldbugs! Obviously paper slips with pretty pictures on them backed up with good feelings and well intentioned policy is a much more sensible way to run a monetary system rather then something which has been valuable for literally the entire history of humanity.

Please to post comments

Comments are closed.