Health care reform is upon us, people. On Sunday evening the House passed the health care reform bill on a 219-212 vote. This is a hotly debated topic, but rest assured that whatever your opinion on the matter is, I agree 100%. And the people who disagree with you and me are terrible and wrong.
To be frank, I’m just glad that this coronary clog in our legislative process has finally been dislodged and we can get our elected officials worrying a little more about financial market reform, which is the next item up for bids.
What will become of our economy in the wake of this history-making legislation? I haven’t the foggiest. There has been so much tumult, pandemonium, hullabaloo, cacophony and other synonyms for noise (thank you thesaurus.com) that I have no idea WHAT sort of impact this is going to have on our economy. And given the fact that the right-wing is sharpening their legal battle-axe to try and undo the bill, chances are that nobody really has a firm grasp as to what the future holds.
Aside from some emotion-fueled, fact-bending, ultimatum-babbling fun from the news pundits on both sides of the fence. That we know for sure will happen.
Another noteworthy event from last week is the Federal Open Market Committee meeting and interest rates decision. Once again, nothing happened. Rates remain where they are, rhetoric didn’t change one iota, the same guy dissented with the decision. Blah. But, sometimes ‘steady as she goes’ is worthy of a market reaction. In this case, it was.
You see, many economic analysts are afraid that this Fed is going to be too ‘dovish’ as opposed to ‘hawkish’ in their monetary policy. For those of us who don’t understand these aviary terms, let me shine some light. Hawkish means that the Fed will be more concerned with fighting inflation (through a tighter money supply and higher interest rates) at the potential cost of restraining economic growth. Dovish means that the Fed will keep money flowing and rates low in an effort to spurn economic growth and consumption at the risk of sparking commodity and cost inflation.
Inflation is the ultimate tax. It results from too many dollars chasing too few products. If stuff gets more expensive at every level then everyone feels it. Need I remind you of how fun $4.00/gallon gasoline was? In the same respect, an unemployment rate that is a hair below double-digits is a big concern too. So what is the ‘correct’ answer? Yeah, I don’t know either. And it is because of Catch-22’s like this that I have no interest in running for any office of any kind.
Ben Bernanke (our fearless Federal Reserve chairman) is a student of the Great Depression. His doctoral thesis was all about how it came about and why it persisted for so long. The general consensus is that overly hawkish policy at that time caused our then fragile economy to slip back into another downward spiral. Ben will be damned if he is about to repeat the same mistake. So, it stands to reason that our financial futures rest on the wings of a dove.
Let’s all hope that it’s a smart dove. Because most doves I’ve seen outside are pretty dumb.
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