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The headline story in this morning's Wall Street Journal is a beauty. Republican economists, hedge fund managers, and even some presidential candidates are blasting the Fed for its $600 billion QE2 pump-priming operation. Quite sensibly, the group that signed an open letter to Ben Bernanke argues against dollar devaluation and inflation. At least a couple of the signees are Democrats. And following Sarah Palin's Bernanke broadside, potential presidential candidate Mike Pence is on the hustings attacking the central bank.
All this is good. King Dollar politics.
During the 19th century, many presidential campaigns were fought on the issue of the dollar and its gold or silver backing. So history may repeat itself. Will we have Keynesian fine-tuning, or stable money backed by commodities including gold?
But here's another reason why the Fed should cease and desist: There's more evidence that the economy looks to be picking up. Today's retail sales report showed a 1.2 percent rise for October, printing to an 11.8 percent annual increase over the last three months. Core retail sales that feed into GDP increased 6.3 percent annually over the past three months.
This won't calculate into the 6 or 8 percent recovery growth that the country really needs. But it does look like business and consumer confidence improved in the run-up to the GOP election sweep.
And it's worth noting that incomes are rising a bit faster, with hours worked combining with wage increases to produce some spending power. And of course, cash-rich companies remain highly profitable.
Meanwhile, on the inflation front, the CRB futures index is up 11.5 percent over the past twelve months. So does the Fed really want to ease into an improving economy, backed by an ominous commodity increase?
Final point: With better economic stats, the U.S. dollar is rising, not falling. And long-term bond rates are rising, not falling. Along with a better economy, the consensus has it wrong, at least for the moment. Go figure.
This article first appeared on Kudlow's Money Politic$ Blog.