Regarding the title above, I know it won’t attract many Google searches, but what the hell? This is the last day of the year. So, on a weighted average basis, how much could it hurt?

Worrying about hits and visits takes the fun out of “posting.” So does that word. Why can’t we call it “blogging”? Bloggers should blog, not post.

Another thing: did I put that question mark in the right place? I remember to put periods inside the quotation marks, but an inside job on question mark doesn’t look right. And what about the one ending the first sentence? Is that right? I’ve lost my little book. 

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My doctor is cooler than most. He carries a blackberry and answers e-mails. Even so, I always dread my annual visits. My treadmill performance keeps slipping, my glucose keeps rising, and our alcohol conversation keeps stretching my veracity. 

Our relationship has always been strictly doctor/patient, but recently he invited me to his book club to discuss Alan Greenspan’s memoir. After a couple of drinks, we got down to business. I hadn’t fully digested the Maestro’s masterpiece, but I knew I could fill in the blanks.

I was soon waxing eloquent from the end of the dining room table with a glass of red wine supporting my memory and elocution. When my half-full glass mysteriously became half-empty, I saw a hand out of the corner of my eye whisk it away and replace it with a glass of water. I knew then that I had witnessed my first miracle. My doctor had turned wine into water.

Time Magazine quoted its Man of the Year, Chairman Bernanke, regarding his boyhood interest in the Great Depression. He had heard his family discuss a town full of shoe factories that closed during the depression leaving the community so poor that its children went barefoot. He said he kept asking why they didn’t just open the factories and make kids shoes. Good question.

A depression does seem paradoxical. People can’t spend because they don’t have the income. They don’t have the income because they aren’t spending. Around and around it goes with the gears not engaging. Looking ahead, there is no supply because there is no demand and no demand because there is no supply.

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In “Hard Money Populism” I mentioned Congressman Ron Paul’s coming to Texas A&M University a few years ago to speak to the Young Republican Club and that the attendance was embarrassingly small. I said that he was a good sport about it and nevertheless gave them “the whole load.”

I don’t know how many readers may have misunderstood what I meant by the whole load, but I know of one, which is one too many. It came from the following story, which I heard many years ago. I don’t know the origin of the story.  

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The first and so-far the only person I’ve heard call himself a “hard money populist” was my friend, Wayne Angell. That was several years ago when he was a member of the Board of Governors of the Federal Reserve and we served together on the FOMC. I wanted to give Wayne credit for the expression before someone else adopts it as something new and original.

Populism in U.S. monetary history was usually associated with opposition to the harsh discipline imposed by adherence to the gold standard. Gold money—hard money—was seen to favor creditors over debtors, especially evil bankers over worthy farmers. Going off gold was unthinkable, so the populists wanted to use more plentiful and cheaper silver as the basis or at least a basis for our currency. The battle cry came from William Jennings Bryan’s “thou shall not crucify mankind on a cross of gold” in his cross of gold speech in the 1896 presidential campaign.

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Do you agree with me that inflation has not been a problem lately? Or, do you agree with those who say it has? It depends on what you mean by lately. The difference between inflation in recent months and inflation year to date has been wider than usual this past year, but that’s changing.

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 A couple of people have mentioned to me that the TARP repayments are all over the news and suggested that I write about it. My response has been that I didn’t know how to avoid saying I told you so. I’ve written and said often that TARP would produce a profit for taxpayers, or only a small loss. However, I could always feel eyes rolling.

While I never bought the idea that TARP purchases of preferred stock was only from banks ALREADY in good condition, I do think it was limited to banks that WOULD BE expected to be in good condition AFTER the purchase. In many cases the government investment was conditional on the raising of private capital as well.

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I ended my previous post, Jobless Recoveries: A Look Back, by raising a question; how does the same monetary policy that fosters disinflation in the general economy foster an inflationary bubble in only one sector? By easing monetary policy, the Fed intended to address a very weak labor market, a jobless recovery that threatened to turn back into recession and disinflation that threatened to morph into deflation. But, if the Fed was creating too much money, why was the money spent only on housing?

It is taken as given these days that the Fed created the housing bubble. If this is true, then it must follow that the Fed is responsible for the bursting housing bubble, the ensuing financial crisis and subsequent recession. But, as I recall, the Fed did not create the housing bubble. It was the collateralized subprime loans, not a reversal of home prices, that caused the problems. Maybe there were too many loans, but, if so many had not been bad loans, air could have come out of the bubble without devestation.

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“Turning to the nation, we’re in the midst of the slowest expansion in post-World War II history, as measured by employment. In the previous nine expansions, it took an average of eleven months for employment to regain its pre-recession peak; the high was twenty-three months in the so-called jobless expansion that began in 1991. At twenty months into our current expansion, jobs are still down 2.6 million from the level in February 2001. So we’re certain to set a new high for the number of months it takes to get all the jobs back.”

This quote is from my opening statement at the FOMC meeting on August 12, 2003. According to the Business Cycle Dating Committee of the NBER, the recession had officially ended in November 2001. There were a few months of job growth after that November, but they turned negative again in 2002 and remained weak in 2003.

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The other day a top-notch interviewer on financial radio was paying more than his usual deference to his distinguished guest on the subject of health care. The guest summed things up with an analogy. He said the case for requiring young people who don’t want health insurance to purchase it anyway was the same as the case for requiring automobile owners to have car insurance.

I waited for the interviewer to point out that the required automobile insurance is liability insurance–in case he has an accident that hurts someone else–whereas the required health insurance would be insurance for the purchaser’s own benefit. He didn’t. Required bicycle helmets would have been a more honest analogy.

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We had a couple of bullies in my small high school, but I’m told that they grew up into pretty good citizens. Time seems to cure that ugly disease in most people. The main exception is our elected representatives. Something happens to them when they climb up on the dias and see the red light on the TV cameras. Senator Jeckle becomes senator Hyde. They get to show their constituents how tough they are. I don’t watch bull fights, dog fights, or rooster fights, and it’s getting harder to watch congressional hearings.

What I don’t understand is why politicians think their deviant behavior is so appealing back home. They apparently don’t have a very high regard for the home folks, especially those in Kentucky and Vermont. My guess is that those folks are better than their Senators give them credit for. Surely blue grass and autumn leaves have some calming effect.

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Here is a CNBC video clip from last night’s Kudlow Report where I defend Ben Bernanke and argue that he should be confirmed for reappointment as Chairman.