Economist Lawrence Kudlow says the ties that bind the Federal Reserve to the White House and Treasury are going to strangle the economy.  From the Washington Times, KUDLOW: Time to roll back the stimulus

Testifying before the House Budget Committee this week, Federal Reserve Board Chairman Ben S. Bernanke said that when the time comes, the Fed will raise interest rates in order to stop inflation from building in the next recovery.

He also asked for “fiscal balance” to sustain financial stability. On the surface – in terms of keeping prices stable and restoring value to the softening U.S. dollar – this is positive. Surely Mr. Bernanke wants to do right for America, and he is giving it his best shot.

But when you talk to traders and economists, the whispered story is that Mr. Bernanke and the Fed are no longer truly independent of the Obama White House and Treasury. As a result, Mr. Bernanke will not be able to slow the printing presses and gradually lift the near-zero target rate in a timely and effective manner. Already the Fed has created more than $1 trillion in new cash, and M2 money-supply growth is the fastest in 25 years.

This monetary explosion explains what’s really driving the dollar down and Treasury rates up (alongside rising gold and oil prices). It’s not huge budget deficits, but the growing fear that a less-than-independent Fed will keep pushing new money into the financial system to fund President Obama’s liberal spending policies.

He says what’s needed is a retreat from huge spending:

With clear signs of economic recovery on the horizon, some now call for ending the unnecessary stimulus package and de-TARPing across the board. Along with a big rise in the money supply, there have been a rebound in commodities, a stabilization in housing, falling unemployment claims, a booming stock market, narrowing credit spreads and rising Institute for Supply Management manufacturing reports. All this tells us additional stimulus is unnecessary.

…Here’s the moral of this story: Excessive Fed pump-priming and over-the-top federal spending is what matters, not the budget deficit. If we keep paying people not to work by piling on more transfer payments and government subsidies, economic growth will suffer mightily. And if the Fed continues buying bonds issued by Uncle Sam, inflation will ratchet higher.

Republicans, are you listening? Roll back the unnecessary stimulus and restore the Fed’s independence.

You should read the whole column to follow his reasoning.

The power-grabbing of this Administration is breath-taking, what with extra-Cabinet “czars” unconfirmed by the Senate running things,  slush funds like TARP used to bully companies to participate in their “voluntary” submission to government mandate, nationalizing industries with results favorable to big political donors while ignoring the rule of law, and politicizing the Federal Reserve to further big government goals, all done under Congress’s nose with nary a whimper.  Where are they?  They need to wake up now and act, before the Imperial Presidency gets more firmly entrenched.

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