Get Ready for A Sugar High

Rich Lowry at the Corner says he got this email from a very smart friend:

The ISM Manufacturing Index for January was at a five year high (58.4 versus consensus at 55.5).  The 4th quarter GDP was up well above consensus.  It was 5.7% growth. The next quarter GDP growth will be even higher, as might all four quarters of 2010, each probably high single digit growth, between 5 and 9% quarter to quarter, seasonally adjusted.  This is well above consensus.  

So. The economy is going to look like it is getting better. It is – in the short run:

The distinction between the long and the short run of economic policy is crucial.  More than $30 trillion was poured into the global economy in 2008 – 2009 by world central banks and governments. That central bank credit expansion has been a much more important stimulus to growth than Obama’s so-called “stimulus program.”  This short-run, central-bank financed growth will surely last through the election of 2010.

Republican candidates and conservative media commentators must prepare the American people for this phony boom with terrible long-term consequences. The news story here is: the revival of the economy by central bank money-printing and enormous government deficits to be paid for by our children.

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