Over $5 trillion of new debt in four years, artificially low interest rates, and Quantitative Easing. Every bad policy has its backers. On rare occasion, all three share a common supporter. While Lee Munson, of Portfolio LLC, has certainly proven his ability to make money in a number of different financial environments, he is, nonetheless, certainly disqualified from joining Mensa- on public policy at least. In a recent interview he went out of his way to praise the sheer brilliance of current monetary policy. Munson, it seems, hearts Bernanke.
Lee Munson echoed the new leftist observation, that we (the United States Government) do not have a spending problem. He argued that out of control government spending is “a false premise.” Nancy Pelosi used similar wording when declining to acknowledge government’s ferocious appetite for increased budgets. President Obama said something of a similar nature to John Boehner when they were working out a compromise for the Fiscal Cliff. A growing chorus of Democrats have claimed that the problem is not the government’s current spending pattern, but the lack of taxes Treasury collects from your income. Alas, poor Mr. Munson is already in suspect company.
If you can stand it, watch the video:
In an attempt to assuage the trepidations of Austrian economists, Munson appeals to their hawkish nature by making the absurd claim that, "We have secret austerity happening in this country," adding, “back in mid 2010 the amount of Federal deficit spending versus GDP was 10.5 percent, now it's 6.5 percent."
And while those numbers are close to being true, it is hardly demonstrable austerity. What Munson fails to mention is the average deficit to GDP ratio. In 2008 our yearly deficit was roughly 3.2 percent of GDP. A stark contrast to the 6 percent Munson hails as a sign of fiscal frugality. In fact, it was after the implementation of the $800 billion stimulus that the ratio shot up to 10 percent. Since 2009, that ratio has (like the unemployment) remained stubbornly high. For comparison, consider that during the Great Depression, deficit to GDP only climbed as high as 5 percent.
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