I’m alerted by The New American that National Review ran a column favoring QE2 as conservative. The author is an economist whose training seems to have drifted outside the Keynesian bubble in which markets are never stable but instead need constant pushing and prodding by fiscal and monetary planners lest the economy tip over into depression due to irrational behavior by consumers and lenders. His argument is highly conventional and not at all surprising; what’s surprising is the venue. How is central planning “conservative?” Well, monetary intervention forestalls fiscal intervention and that’s good. Also, he argues, Milton Friedman favored monetary stimulation in tough times and so should we.
Murray Rothbard was the master at spotting how small deviations in free-market orthodoxy can lead to catastrophic results. The concession by Friedman that some stimulation might be necessary is a good example of this. He was a great opponent of inflation, except in some emergency situations. His lasting legacy is to be constantly cited in defense of every conceivable inflationary scheme, even something as obviously disastrous and unworkable as QE2. If conservatives can’t see the problem here, I don’t see how it can be said that American conservatism stands for anything at all – except perhaps building the state using different language than the left uses.