Mitt Romney’s Monetary Policy Mystery Continues

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A while back I wrote about the opacity of Romney’s views on monetary policy, so it’s worth circling back around given that he touched on the issue briefly in his interview on Meet the Press. Here’s the relevant portion of the transcript:

MR. ROMNEY:  I mean, this– this is– this is really saying that people are having a hard time finding work. It’s very, very troubling.  And of course the stock market does well in part because the indication by the Fed that they’re going to print more money, pour more money into the system, says we’re likely to have down the road high inflation.  And where else are you going to go?  If interest rates are going to be near zero investors have to go somewhere to protect against inflation.  The stock market’s the only place to go.

GREGORY:  You don’t think the Fed ought to be any more involved at this point?

MR. ROMNEY:  Well, I don’t think that– that easing monetary policy is going to make a significant difference in the job market right now.  I– I think what the– the nation needs is a change in fiscal policy.  A– a different structure to our economic positions.  And if we take the right course I believe you’re going to see this economy come roaring back, because I do believe, as you began by saying, that– that there are– many, many entrepreneurs as well as major corporations that are ready to jump, but they’re hoping to see the kind of conditions on the ground in this country, the economic conditions, the pro-business, pro-jobs conditions, that suggest it’s a good idea to invest in America again.

There are a few things worth pointing out here. One is Romney’s continued ability to talk about monetary policy without offering any hint of his guiding philosophy.  His statement that easing is not “going to make a significant difference in the job market right now” is not particularly telling. Depending on how you define “significant,” I think you’d be hard-pressed to find someone who thinks that another bond-buying program from the Fed can turn the economy on a dime. Beside, he’s said before that he does think easing can work. (He called it “effective to a certain degree” in 2009.) More notable is what Romney isn’t saying: that the Fed has no business trying to affect employment, a view that his running mate holds. But he also hasn’t ruled it out.

Second, Romney’s point that fiscal policy is more useful right now is something that Ben Bernanke and Barack Obama totally agree with. Romney won’t call it “stimulus” or finger congressional Republicans as the primary obstacle to its passage, but some form of federal spending and/or tax cuts a la the Recovery Act and the December 2010 Bush tax cut deal are basically the sort of policy he’s talking about. It’s safe to assume Romney leans more toward the tax cut side of things, but if you doubt his belief in stimulus, you need only go back to 2008, when he proposed a $250 billion package, more than any other presidential candidate, and criticized John McCain for proposing austerity. (He also warned about the dangers of cutting too quickly this year.) The U.S. has been operating without deliberate fiscal policy since the end of 2010, and Bernanke does not enjoy the fact that he’s basically steering the economy alone. “I’d be much more comfortable in fact if Congress would take some of this burden from us and address those issues,” he said this year. Romney apparently agrees.

Finally, there’s this sentence to unpack:  ”And of course the stock market does well in part because the indication by the Fed that they’re going to print more money, pour more money into the system, says we’re likely to have down the road high inflation.” I can’t tell whether he’s stating his opinion that high inflation is on its way if the Fed engages in further easing or whether he thinks that the Fed has already signaled to the markets to expect high inflation. If it’s the latter, Romney is wrong. As the Federal Open Market Committee put it in its Aug. 1 statement, “Inflation has declined since earlier this year… and longer-term inflation expectations have remained stable.”  But either way, Romney’s flashing the kind of monetary hawkishness that’s in vogue these days on the right. The question remains whether that’s lip service or whether it would inform his pick to head the Federal Reserve should he be elected President.

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Louis J Asmo
Louis J Asmo

I read and read these comments and one thing is purely clear....these are PARTISAN comments and they all sound the same to me. I am an INDEPENDENT and believe me you guys that favor President Obama sound just as stupid and PARTISAN to me as do the Republicans who favor Governor Romney.

You know I do think that politics is dirty and that we have some real weirdos in office but I also believe we deserve it. Just read some of these really PARTISAN comments which have ZERO substance and just knock and knock and knock.

It seems like dumb non substantive leaders who lead dumb non substantive followers.

I do believe we need a 3rd party...a common sense party of  DOERS not talkers and knockers and partisans.

Our country is in trouble and the best we can do is argue like kids!!!

Louis J. Asmo getting older and very tired of all of this!!!

aou07wisdom
aou07wisdom

i think it is becoming clear that all GOP always do is playing on people's ignorance and lack of understanding of details and effects of their policy. And i must give them credit for being very good at marketing their policy. lies won't sell unless you make people believe that the lie is suddenly a criteria for survival and they are really good at it. hey   they keep saying obama accumulate $5trillion debt. has anyone question where this debt comes from? largely from the bush tax cut that the obama administration although does not believe in but decided to keep for the sake of harmony and bipartisanship. and what does he get back for it? party of NO, pounding and blaming that he caused the debt. i'm not surprise romney find it difficult to explain his policies because it can only work in the moon colony where the moon is on it own and don't have anything to do with other countries. Or how can anyone believe their policy of cutting investments, cutting beneficial services to middle class, poor and then giving tax break to the rich in the face of europe economy drag, asian economy slow down, tight purse of middle class and the poor who are the major consumers and suddenly this policy will cause unbelievable growth where companies would hired people to be looking at their goods that were not selling or sitting down in the offices where no clients come to, and then unemployment would be down quickly. check http//:aou07wisdom.wordpress.com for other analysis

BananaCharger
BananaCharger

The problem is we have almost no choice, Romney won't equivically state what he's for, and the President just wants more of the last four years. The one thing I know is, the last four years have been horrid, I'll take the unknown.

ERenger
ERenger

It's interesting that he thinks a change in fiscal policy is what would be most stimulative to the economy, because fiscal stimulus generally amounts to deficit spending. I wonder if he ran that past his VP candidate. 

John Pangos
John Pangos

Adam, Ben Bernanke said in 2007 that there was NO housing bubble. Do you believe him now when he says there is no inflation on the hoizon?

Carol_Parker
Carol_Parker

Romney has a record as a Governor that he never discusses.  Why is that not reviewed?  Actions speak louder than words and his actions as an elected official are as important to me as his business record.  He should be running on both.

Curious_Quiche
Curious_Quiche

Pay no attention to the man behind the curtain! I AM OZ!

bobell
bobell

This is a reply to ahandout.  Disqus rejectd it when I trid to thread it.

It's called a feedback loop, and there's slippage in all feedback loops. The goal is to keep the slippage at a minimum.

DerekHologram
DerekHologram

I suppose it is difficult for Romney to promote fiscal policy, when his party has spent the last several years obstructing any fiscal policy. The Fed is about the only entity that can try to do something about unemployment, without right-wing fanatics getting in the way.

ChowT
ChowT

Otherwise the Gopers will obstruct on everything !

bobell
bobell

It's called a feedback loop, and there's slippage in all feedback loops. The goal is to keep the slippage at a minimum.

ahandout
ahandout

Adam,  when you state that a presidential candidate is wrong about the Fed, you should keep in mind that the Fed is ALWAYS eventually wrong.  The Fed raises and lowers interest rates to correct what the Fed did wrong.  The Fed poured way way too much easy money into the system in the late 1990s - stock market bubble and began the housing bubble.  Then it raised interest rates - recession, and on and on.

We have inflation right now, commodity inflation.  It's one reason why oil is so high.  There will be another bubble. 

bobell
bobell

It's called a feedback loop, and there's slippage in all feedback loops. The goal is to keep the slippage at a minimum.

bobell
bobell

It's called a feedback loop. The goal is to keep the loop as tight as possible. But absolute tightness is no more attainable than absolute zero.

The Fed does better at some times than at others. But by definition it's always going to get the tuning at least a little bit wrong -- and sometimes very wrong.

Do you know a better way to do what they do?  I'd love to hear one.

Earl Gray
Earl Gray

He is a cardboard cutout with a recording....  Looks "kind of" like a candidate from far away, very thin and no substance up close........

He might as well just say "They are doing Bad!!! and I will do Good!!!"   It is the same level of detail, and saves a bunch of words....

ERenger
ERenger

Still too many words. Try this:

"Obama Bad. Me good." 

Sue_N.
Sue_N.

Why should anyone expect Romney to have a monetary policy when he doesn't have any other kind of policy?

Seriously, I've been voting since 1980, and I don't remember a candidate of either party who has ever told us less about what he plans to do. I certainly haven't agreed with them all, but at least I've had a fairly good idea of what they intended. Not this guy. He is the original blank slate.

Yes, the partisan GOPers will vote for him simply because he's got that magic "R" after his name, and because he's not Obama. But the serious Republican voters (and, yes, there are some out there) deserve better. They deserve to know what, exactly, they're being asked to vote For.

Leftcoastrocky
Leftcoastrocky

to make the arithmetic work, romney will have to get rid of the mortgage deduction -- this of course will damage a fragile housing market and drive the economy back into recession.

djphat2000
djphat2000

Are you sure?  Will, Willard, Mitt, Mittens?  Which is it?

ERenger
ERenger

Wee Willie Winkie? 

Mark
Mark

How can Romney debate without any policies to debate.   Are we going to hear the same message as we have for a year, saying nothing.    Romney is a Fraud

Mark
Mark

Romney has no policies on anything.  I had to laugh at him on Sunday at the talk shows.  He goes in circles and say NOTHING.   He is the biggest Fraud of all times, and thinking he can fool the voters.  Well the voters learned a lesson when G Bush ran on the same way,   and all LIES.  You cannot fool us again Romney.   

allthingsinaname
allthingsinaname

Or to put it another way, We do not know what he means, where he stands, what he will do, or if he will do anything.

Why can't you guys just say it; Mitt Romney is one big suprise package, and one big gamble.

The only thing we know about Romney, for certain, is his name.

ERenger
ERenger

Mitt Romney, Monetary Man of Mystery. 

Curious_Quiche
Curious_Quiche

To paraphrase ol' Bill T. Sherman, "I will not divulge. I will not divulge, if I am interrogated I will equivocate."

MACV
MACV

Willard Mitt Romney ~ and isn't that food for thought ?

Dan Bruce
Dan Bruce

As usual, Romney said nothing of substance. And, even when he says nothing of substance in his interviews, he aways ends up telling lies and contradicting himself. Romney must have a pretzel for a brain.

ChowT
ChowT

Please dont insult pretzel.

Bill Pearlman
Bill Pearlman

Romeny is right about this. Continued monetary easing would be ineffectual. And Adam Sorenson obviously live in Obamaland where nobody goes to the supermarket

MikeN13
MikeN13

Ok, we know one thing Romney thinks won't work.  What will he do instead?  I feel kind of like we're playing with the Cat in the Hat here!  Crossing off everywhere he isn't.

Pnnto
Pnnto

No one watches the Sunday shows, goodness knows I don't, so Willard's gibberish yesterday isn't going to hurt him.

The debates on the other hand...

terry1956
terry1956

I can tell you what it should be.  

Appoint Ron Paul secretary of the Treasury and with a few changes encourage congress to pass Ron Paul's competitive currency bill.        

 Oh yeah appoint Alan West secretary of Defense.       

 

prestalex
prestalex

The stuttering sentences sure gave his interview a surreal sense of reality...

ChowT
ChowT

hahahahahaha. Thats a good one. hahaahahahahahaha

jmac
jmac

"The question remains whether that's lip service   . . "  He's stated he doesn't want to cut defense, then explains that that's because it would "cost jobs".  Another mystery as Krugman questions his "weaponized Keynesianism".  

He will remain an enigma.  The bottom line is he might be an Obama/Bush Sr on the economy or a Bush jr.  It's not worth the risk to find out since we have the Supreme Court, the environment, Roe, and foreign policy  that are just as important.   He would certainly have a base riled up if he won - that's scary.  It's not about Romney, Obama or the economy- it's about the two parties and what they stand for.

bobell
bobell

I think Romney knows that stimulus of any sort is beneficial, but I wonder how clear he is on the varying amounts of stimulative effect you get from various sorts of expenditures and tax cuts.  Least stimulative of all is cutting taxes on the rich.  Most stimulative is good jobs doing necessary work, like repairing our collapsing infrastructure -- or building warplanes and -ships.

He could clarify his position and show his understanding if he were willing to discuss stimulus by actually discussing stimulus -- maybe even by using the word "stimulus" as something other than pejorative. But that would get the base furious, because the base subscribes to fantasies like the Ryan budget.  Mitt has a grasp on reality, but he can't let the base know that.  So he winds up sounding like the Delphic oracle -- unerring but also incomprehensible.

pollardty
pollardty

If you keep this up you'll never be invited to the really good parties. Nice post.

destor23
destor23

His clear policy preference here is for the Fed to raise rates.  What he doesn't explain is why he thinks that raising the cost of money would somehow stimulate business activity.  To believe that, he'd have to think that people are, right now, turning up their noses at money making opportunities because they fear inflation down the road.  If that's what we thinks, he's either such a brilliant, counter-intuitive financial thinker that I don't even understand him, or he's nuts, misinformed or, more likely, just trying to fill up air time without saying much of anything.

ifthethunderdontgetya™³²®©
ifthethunderdontgetya™³²®©

It’s safe to assume Romney leans more toward the tax cut side of things...

Of course.  In spite of the fact that it doesn't work nearly as well as putting money into the pockets of those who need it, it does reward the plutocrats who run the GOP.

And that is all they care about.

~

DSZ199
DSZ199

When's the last time the plutocrats earned an honest buck?  They're affected by capital gains tax rather than income tax.  Also, when did someone actually "put money into pockets of those who need it?"  Except for some prudent infrastructure spending, much of the rather uncreative stimulus went wherever Congressmen wanted it to go for their crony projects.  And basically, the stimulus, and quantitative easing, makes the money you and I earn worth less via the sticky wage principle.

bobell
bobell

The cut in FICA tax definitely put money in the pockets of those who need it ( along with many who don't, to be sure).  It would have done better as a refund rather than a reduction in withholding, even though the two are functionally identical as long as the amount doesn't change, but it was quite useful even so.  So useful that its expiration on 12/31 is part of the fiscal cliff.

JohnYuEsq
JohnYuEsq

Only President Obama and the Democrats PROTECT America's MIDDLE CLASS. VOTE the DEMOCRATIC TICKET.

MrObvious
MrObvious

Mitts ability to attack Obama is legendary -as well as his ability to articulate how different he is from the president.