David M

The "Science" of Monetary Policy

Groupthink is the best explanation I have heard so far for the "hear no evil speak no evil" tone that has been a hallmark of this
administration.

In foreign policy, the neocons set the agenda, and they literally reject facts that are contrary to their ideology. Mission NOT
accomplished? Hey, let's all agree to redefine what we call "success" so that in a semantic sense "failure is not an option." This is a
complete detachment from the reality of the Iraqi occupation.

The reality is that we've lost more Americans and spent more money in Iraq than we lost on 9/11/2001. In an administration that
frequently speaks about sending signals, what kind of message or "signal" did we send to the world; that no one can hurt us more than we can hurt ourselves? Yeah, that'll show 'em!

This relates to our current domestic economic problems in a simple, common sense way. (Iraq War spending + ill timed and ill-targeted tax cuts) = high budget deficits = weak dollar = expensive oil. BTW, the fanatics who attacked us were from Afghanistan and Saudi Arabia.

It is no coincidence that the last time we had to deal with "stagflation" was the last time we had a war we did not pay for. With Vietnam, we tried to pay for the war and social welfare programs at the same time, when we only had the money to do one or the other.

This time, the administration decreased tax revenue as it increased government spending. A common sense reading of history tells us that the policies that led to stagflation in the '70s were ruinous to our economy; yet this administration repeated them.

A common sense understanding of underwriting tells us that packaging lots of risky loans together does not magically make them less risky.

Apparently common sense disappears from a room full of people engaged in Groupthink, whether it is geopolitics or wall street.