Earlier today, PIMCO managing director Paul McCulley took to the company blog to offer a word of congratulations to Ben Bernanke. "Bravo, Ben," McCulley, a fan of QE2, wrote. How has the mustachioed investor come to the conclusion that the Fed's program is the right move for the economy? It passed his litmus test when it was panned in equal measure by both smart, savvy individuals and Sarah Palin. Sayeth McCulley:
It brings me great angst to observe professional critics – many of them acquaintances and friends of mine – rhetorically beating Fed Chairman Ben Bernanke about the head and shoulders for launching QE2. At the same time, the fact that Sarah Palin has joined the chorus brings me great joy. If what Ben is doing offends both the learned and the unlearned, then he is clearly acting unconventionally relative to orthodoxy. And this is good, very good.
So just, you know, get on board. And if you can't get on board, just shut the hell up and take it. This is happening, so buckle up.
The Fed makes policy consistent with its legislative mandate handed down by the democratically-elected government of the United States. And that’s what the Fed is pursuing: mandate-consistent levels for inflation and the unemployment rate. This is as it should be.
The rest of the world should simply accept this outcome as reality, and adjust – or not adjust – their own domestically-oriented objectives and policies accordingly. Is there room for multi-lateral dialogue, perhaps even some degree of coordination, as various jurisdictions grapple with heterogeneous economic and financial exigencies? Absolutely. But that does not imply that the Fed should abdicate its responsibilities to pursue the mandate given to it by the American people. Pursuing that mandate is precisely what the Bernanke-led FOMC is doing.
Bravo, Ben: Illegitimi non carborundum.