Obama and screwflation

By A.J. DiCintio

Polling has made it inarguable that millions who bought candidate Barack Obama's new age makeover cream now realize they were snookered by a Chicago Machine grad whose shtick is to pretty up policies that further fatten a porcine federal government and hoggishly growing national debt with the deceitful lipstick of "change" and "reform."

However, there is another problem surrounding Barack Obama's presidency, a profound problem that unfortunately isn't widely known and discussed.

Specifically, it's that the ostensibly common-people-loving Democrat enthusiastically implements and supports policies that give rise to the condition hedge fund manager Doug Kass has termed "screwflation."

Now, there's inflation, disinflation (a reduction in the rate of inflation), deflation (falling prices), and stagflation (a stagnant economy accompanied by inflation).

But what is screwflation?

Mr. Kass explains:

Screwflation. . . is . . . a period of slow and uneven economic growth [whose] inflationary consequences have an outsized impact on. . . the middle class, a segment of the population that has already spent a decade experiencing an erosion in disposable income and a painful period. . . of lower stock and home prices.

Yes, like big-business-bought or neo-con Republicans who can't say enough about the blessings that flow from "free" but unfair trade, open borders, and be-as-big-and-as-bad-as-you-wish unregulated banks, Obama's policies continue putting the screws to the very group that has made America the exceptional nation it has always been.

To be totally honest about it, he has surpassed the perversity exhibited by others who are responsible for this moral and economic outrage in substance and style.

Regarding the latter, consider that as he disingenuously calls for civility in the nation's political discourse, his fellow liberals condemn those who have plain had it with the screwing as "swastika" bearing fascists (Nancy Pelosi), "evil mongers" (Harry Reid) and "racists" (just about every last liberal politician and commentator).

But as repugnant and poisonous as that vile name calling is, citizens are more interested in precisely how Obama is intensifying screwflation. Here, then, are the details.

First, there is the $1.5 trillion deficit that annually adds to a national debt currently standing at a stunning $14 trillion, a reality Obama has shamelessly ignored except for recently when he peeped a few phony words to respond expediently to a Republican plan for fiscal reform.

The president's shocking nonchalance regarding this profound problem aside, the fact is that in addition to endangering the stability and prosperity of the nation our children and grandchildren will inherit, the federal government's mad spending and insane debt debilitates contemporary America by sucking money from the private sector and by dangerously weakening the dollar.

The first depresses the economy and job creation (except in government).

The second erodes the soundness of America's credit, which leads to a plunging dollar, which leads to rising commodity prices, which leads to inflation, the rabid predator who wreaks the very worst of his viciousness on middle class workers and business owners, the retired, and the poor.

But Obama isn't raising the level of screwflation only through insane levels of spending and debt.

With the liberal president cheering him on, liberal Ben Bernanke is printing dollars by the trillions to buy federal debt and thus keep interest rates artificially low in a fiscal policy that — Holy hypocrisy, Batman! — also happens to constitute welfare for big banks, huge corporations associated with owning and selling commodities, and very deep-pocketed commodity speculators.

Here is Doug Kass on how that maniacal printing affects the middle class.

[The Fed's policy] is designed to lower real interest rates and, at the same time, raise inflation. A lower interest rate policy hurts the savings classes — both the middle class and the elderly. And inflation in the costs of food, energy and everything else consumed (without a concomitant increase in salaries) will screw the average American who doesn't benefit from [the flood of money].

But not just Kass. Listen to what the estimable financial guru Dr. Ed Yardeni said recently about the Obama/Bernanke dollar tsunami. (Thanks to Barry Ritholtz of The Big Picture.)

The Fed is still your friend if you are invested in cyclical stocks, commodities, and foreign currencies. If you eat food and run your car on gasoline, the Fed will continue to hurt you. If you are looking for a job, you may be wondering why it is still so hard to find [one] despite all the money the Fed has [printed]. . . If you are retired and living on interest from your CDs, then you are getting really squeezed between rising food and fuel prices and the Fed's zero interest rate policy. In other words, the Fed seems to be doing everything to widen the gap between the Haves and Have Nots than to lower unemployment and boost economic growth. . .

In addition to the causes of screwflation just mentioned, I add two more not sufficiently discussed by open-minded financial experts.

"Free Trade" — Obama has continued trade policies that have cash strapped, infrastructure degraded America "nation building" in China, Mexico, etc. with the tab picked up by an American middle class suffering the triple whammy of reduced or stagnant family income, fewer and fewer good jobs, and higher taxes at the federal, state, and local levels.

Indeed, to get an idea of how much damage is being caused by trade-induced screwflation, we need only listen to the stories of the great number of unemployed and underemployed Ohioans who can never forget that candidate Obama stumped in virtually every square foot of their state, promising to do something about harmful trade policies only (here we go again) to say not a word about the subject, much less do anything about it, since the day he was inaugurated.

Immigration — Yes, the nation needs immigration, but through a rational policy that insists upon strictly controlled borders and takes into account a multitude of economic, social, and cultural factors.

Problem is, the truth about the kind of immigration madness Obama supports in spades is that Democratic politicians have allowed it to exist in order to create a new, reliable bloc of voters, their Republican counterparts to provide cheap labor that also lowers wages of working Americans, and politicians of both parties to bring about an ironically self-defeating amelioration of the screwflation they have caused.

Of course, some citizens will deny those perverse motives; but they are the same folks who have scraped up every last penny of their savings and mortgaged their homes to the hilt in order to take advantage of a once-in-a-lifetime opportunity to "steal" a certain bridge from a "financially devastated" owner who swore he was distraught at having to part with his beloved possession.

To conclude —

As revealed by the deeply disturbing findings of "The American Middle Class Under Stress" published by the nonpartisan New America Foundation and summarized by The Daily Ticker's Aaron Task at yahoo.com, the gangrenous effects of screwflation have been slowly but inexorably rotting the flesh of the nation's middle class for decades.

My contention here is that Barack Obama's policies have not only continued that rotting but have exacerbated it.

And my comment to those who refuse even to think about Obama's role in the furtherance of the rot because of their intransigent "slobbering love affair" with the president is this:

"Good luck with that bridge you bought."

© A.J. DiCintio