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Sunday, September 16, 2012

Kudlow – QE is the Achilles Heel of the US Economy

Larry Kudlow explains why he thinks QE3 will hurt the economy by noting QE2 devalued the dollar. You see – inflation soared! OK – those of you who understand reality will ask – what inflation? And maybe we should remind Larry that dollar devaluation tends to increase net exports, which of course, tends to raise aggregate demand. I pity those who watch CNBC thinking they are gaining wisdom. Of course, Kudlow's graph left off earlier periods including the Bush years which were dominated by dollar devaluation. I don't recall him complaining about Bush's inflation. Then again, the dollar appreciated towards the end of Bush's second term. I trust Larry knows that was the beginning of the Great Recession.

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