Like Father, Like Son? The Disappointing Domestic Bushs

I once commented to President George H. W. Bush that conservatives were grateful for his leadership in the international arena but had regrets about his too-liberal domestic initiatives. He did not take it well.

Unfortunately, the same comment is even more true of President George W. Bush. His domestic legacy, defined by the oxymoron "compassionate conservatism," shares the worst attributes of both liberal and conservative approaches to government.

The St. Louis branch of the Federal Reserve publishes the nation's monetary base, which can be described simply as the money the Fed has printed and distributed into the economy. The general rule is that money supply should grow at about the economy's underlying growth rate. Monetary growth above that creates (and defines) inflation.

We'll be a long, long time digesting the politicians' panic of 2008.

Remember the panic surrounding the lead up to Y2K? The fear that the American economy would come to a complete halt because so many mainframe computers and personal computers running a Microsoft operating system might suddenly crash, leaving us without access to our checking and savings accounts, ATMs unusable, credit cards without credit?

The answer then was for the Fed to pump record amounts of cash into every branch of every bank in the country so that if all else failed customers could convert checks into dollars and then spend the cash.

That was management in the face of panic.

The current practice is management fueling panic, doing damage that will last far longer and hurt much more than the recession we're trying so hard to avoid.

The first immutable rule of economics: never look to politicians for leadership. They'll nearly always choose the wrong path while complimenting themselvings for making hard choices.