Treasury Secretary Snow, Please Resign

Apr 17 , 10:54 AM
Treasury Secretary Snow, Please Resign
by Hale Stewart
Blogging Of The President News

Since your appointment as Secretary of the Treasury, you have continually demonstrated a lack of understanding of basic economic concepts or diplomatic ability. The most egregious examples of this ineptitude are listed below. For these reasons, and in the nation’s interest, please resign to allow a more competent person to assume the Treasury’s leadership.

When asked by a Bloomberg interviewer if the 1-2 trillion dollars required for social security privitization would increase interest rates, you responded no. The markets would reward the US for effectively dealing with its problems and not demand a higher interest rate. This statement is wrong and demonstrates a basic misunderstanding of supply and demand. When a producer places more goods on the market he lowers the price of the product because it is easier to obtain. Because a bond’s price and yield are inversely related, lowering a bonds price would increase yield. In addition, the total US deficit is approximately 7.8 trillion dollars. Adding 1-2 trillion to this would increase total US debt by 12-25%. An increase of this magnitude increases the possibility of a US credit default. Creditors would demand a higher interest rate as compensation for this possibility. In short, Mr. Secretary, it is impossible for the US to issue this amount of debt without increasing interest rates. Making claims to the contrary indicates a fundamental misunderstanding of basic economic concepts.

In response to the ever increasing US trade deficit, you stated it simply shows the US is a vibrantly growing economy. In effect, the trade deficit was in a fact positive sign for the US economy. I would strongly recommend you read Paul Volcker’s comments on the trade deficit in a Washington Post editorial dated April 10, 2005, where he stated “I don't know of any country that has managed to consume and invest 6 percent more than it produces for long.” The US trade deficit is a clear sign of this imbalance. It is not a sign of economic strength. It is a sign of a country that consumes more then it makes and is unwilling to pay the bill for its excess. Characterizing the trade deficit as a positive for the economy is at best dishonest and at worst blatant disrespect for economic reality....