Does the GOP want the economy to fail?

Of all the strange things that Republicans have freaked out over during the last two years—a federal version of Mitt Romney’s health care plan, a continuation of George W. Bush’s bank bailout, a failed attempt to implement John McCain’s climate bill—perhaps the strangest target is Milton Friedman’s monetary policies. Yet here we are.

Last month, the Federal Reserve announced it would purchase $600 billion in Treasury bonds in order to push down long-term interest rates and spark the moribund economy—a practice known as quantitative easing. Conservatives exploded in outrage. The Republican group e21 published a scathing open letter to Fed Chairman Ben Bernanke by economic luminaries such as Bill Kristol, while GOP lawmakers stoked fears of hyperinflation. Several Republicans in Congress introduced bills to change the Fed’s dual mission from one of balancing low inflation with high employment to a single mission of fighting inflation at all costs.

Inflation-phobia does hold a cherished place in the conservative canon. Inflation is a tax on wealth, while unemployment penalizes labor. Naturally, conservatives cherish price stability. What’s new is the sudden ascendance of radical, hard-money beliefs. Fox News demagogue Glenn Beck has spent months stoking fears of Weimar-like hyperinflation, while imploring his audience to buy gold, the preferred currency of inflation-phobes. Incoming House Budget Committee Chairman Paul Ryan hyperventilates, “we’re coming untethered with our sound money roots.” Meanwhile, core inflation is very low and falling.

During the last (and far less severe) recession in 2001, conservatives raised no objection to aggressive lowering of interest rates. Sometimes liberals and conservatives disagreed over how low to let unemployment go before the Fed raised rates, but nobody advocated that the Federal Reserve stand aside in the face of mass unemployment. Republicans no less than Democrats have advocated low interest rates during recessions. “I don’t know a single American that wants [interest rates] higher,” noted President George H.W. Bush in 1992. “I think every American would like to see them lower.”

Now, it is true that the Fed’s quantitative easing is a less conventional way to reduce long-term interest rates than the usual methods. That merely reflects the fact that short-term rates have hit near zero. Until recently, buying up longer-term bonds was a perfectly respectable conservative answer to the problem of a stalled economy and no further room to cut short-term rates. When Japan faced a similar crisis a decade ago, conservative icon Milton Friedman urged, “They can buy long-term government securities, and they can keep buying them and providing high-powered money until the high-powered money starts getting the economy in an expansion.”