fightin' words

Cashed Out

Florida's Senators flub questions on monetary policy


Congress has been in recess, which means folks like Senators Bill Nelson and Marco Rubio make their way to Florida to message in local markets, such as happened last week.

As someone who believes that the economy is by far the most important thing that legislators can address, it was nice for me to actually have a pretext to ask questions about it without having to go too far off topic in gaggles.

What wasn't so nice: Neither Nelson nor Rubio were able or willing to talk seriously about the straw that stirs the drink of the economy: monetary policy.

Over the decades-especially since recovery from the 2008 economic crash-we have seen the dollar weakening, which has led to expansion of federal deficits and debt ($21 trillion now, and that doesn't include the ultimate impact of future entitlement obligations).

Closer to home, that devaluing of currency has led to a devaluing of the value of the work you and I put in. For those of us who rent, for example, prices go up more than 5 percent year over year.

That's on average. As WJXT reported a few weeks back, short-term corporate rentals are up as much as 20 percent over the year. One can expect that holds true in hot markets and for new construction.

I mention this as a measure of monetary policy. Jacksonville hasn't gotten hotter, per se. Loose credit and government spending obligations have made the rental market look that way.

And, as mentioned a few paragraphs back, our senators (R or D) don't have the vocab to talk about it.

Sen. Nelson was in town last week talking about President Donald Trump's tariffs on aluminum and steel. Using a historical reference that may have challenged some members of the gaggle, Nelson likened tariffs on metals to the wide-ranging Smoot/Hawley Act from the Herbert Hoover Administration, intimating that tariffs alone could set off a recession ... if not a depression.

Tough talk! But what about the dollar, which Treasury Secretary Steven Mnuchin said he was happy to weaken just months ago?

"Everything is so complicated and so inextricably entwined. The value of the dollar along with imports and exports. You throw some of that out of kilter, and then you start getting into a recession," Nelson said, offering a non-answer to a direct question.

There's nothing complicated about America weakening the dollar. It has been propped up by inflating the money supply domestically and by the Treasury Department assuming short-term debt. The idea is to keep this sinking ship afloat for one more election cycle.

Sen. Rubio was in town helping Trump message on the tax cuts act-the one that passed a few months ago, bringing short-term tax cuts to actual people while giving big businesses bigger, permanent tax cuts.

"I think the rate of spending needs to be controlled," Rubio said. "Ultimately the thing that drives long-term debt is the structure of very important programs that I support, Medicare and Social Security. I want to save those programs. They need to be reformed for future generations."

So Rubio's solution is to address the systemic issues. Just not any time soon.

When I pointed out that Mnuchin has said that he welcomes dollar weakness, Rubio—like Nelson—gave a non-answer.

"That fluctuates based on global trends; it also fluctuates based on the administration," Rubio said.

In other words, it just, you know, happens.

What happens with the dollar is more important to you and me than most of the things our politicians have focus-grouped takes on. As brutal as our foreign wars are and have been, the vast majority of us will never see military action in them. However, we can't help but see the effects of monetary policy.

We see it in our 60-hour-plus work weeks, and the havoc they wreak on everything from personal relationships to community involvement. We see it in our inability to save, and in the hidden costs passed on by companies just trying to keep shareholders happy for one more quarter.

The politicians now in office won't have an honest conversation about monetary policy. And you're not going to get one out of them any time soon.

George Orwell described a concept—the "two-minute hate"—that fits our news cycle. Essentially, we careen from one manufactured outrage to the next. Get swept up in the swirl of protests and counterprotests. Then, six months later, it's all but forgotten.

Meanwhile, we all get poorer and more leveraged out. Yet there are no bullhorns or placards or flash mobs objecting to that. And there won't be until it's past too late. Ask Argentina about that.

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There are a lot of problems with our system beyond some simplistic catch phrase like "monetary policy"... so may problems it might not be repairable. Expecting a Senator to respond to such a broad question as "monetary policy" is ridiculous and when your article puts me in the position of having to defend Rubio, that's pitiful.

Yes, a weak currency can be used by central bankers to manipulate a domestic economy and it produces both positive and negative impacts depending on how you fit into the economic system; rich or poor, investor, worker, stock owner, consumer, etc... so asking for someone's position on a strong or weak dollar should always elicit a response that says, "It depends..."

The larger questions should be how can we continue to spend every tax penny on the military and sustain a our domestic society? In the largest period of wealth inequality in history why are we giving tax breaks disproportionality to the wealthy? What is being done to reduce the influence of money on elected officials? Why are local governments like Jacksonville abandoning large swaths of neighborhoods in favor of subsidizing new developments for wealthy developers? Why are local officials more focused on selling off the people's assets to their wealthy cronies rather than addressing the needs of citizens? Why did local officials give tax incentives to the wealthiest man on the planet? (Bezos/Amazon)?

Just a few of the questions that needs answers... Wednesday, April 11, 2018|Report this