If you are a Republican running for president, what should be your opening line of attack – the one thing the voters should remember as your biggest concern? The lousy economy? The lack of jobs? The federal deficit? The war in Afghanistan?

If you’re Rick Perry, Governor of Texas, how about leading off with the Federal Reserve and Quantitative Easing? In fact, why not go right after Ben Bernanke, and accuse him of treason, suggesting he might want to avoid large crowds milling around lampposts. Either Rick Perry is naïve and hopelessly out of his league in the big game of national politics, or he’s on to something. His gambit did work in one respect: it got him a lot of publicity, and it wasn’t entirely bad because so far he has refused to back down on his statement.

He’s standing up to some pretty big bullies, too. Here’s what Karl Rove had to say:

You don’t accuse the chairman of the Federal Reserve of being a traitor to his country. And, suggesting that we treat him pretty ugly in Texas — you know that is not, again, a presidential statement.

Washington insiders like Karl Rove think that the worst possible thing they could say about another politician is that they are not serious – they lack gravitas, the experience, and the stature to run for high office. That’s what he means when he says that Rick Perry did not make a “presidential statement.” This, of course, is wonderfully rich, and in the highest traditions of Republican hypocrisy, considering that Karl Rove worked for eight years for a president who made boatloads of unpresidential, and mainly incomprehensible, statements.

So what is really behind Karl Rove’s claim? It might have something to do with Texas politics, and the fact that Rick Perry was at one time a Karl Rove client but then dumped him when he no longer wanted to follow his advice. Apparently not all Texas politicians like bouncing along on Karl Rove’s strings.

Maybe Karl Rove thinks Ben Bernanke is doing a terrific job and Quantitative Easing is a justifiable economic policy option. If so, he is out of touch with the Tea Party people who now have the Republican Party held hostage (as they did the entire nation a few weeks ago). He is also out of touch with Wall Street, which for the most part has come to see Quantitative Easing as a failure. Here is a beautiful description of what Ben Bernanke accomplished with QE2, written by John Hussman of The Hussman Funds:

Without question, one of the notions buoying Wall Street optimism here is the hope that the Fed will pull another rabbit out of its hat by initiating QE3. That's a nice sentiment, but it does overlook one minor detail. QE2 didn't work.

Actually, that's not quite fair. The Federal Reserve was indeed successful at provoking a speculative frenzy in the financial markets, which has now been completely wiped out. The Fed was also successful in leveraging its balance sheet by more than 55-to-1 (more than Bear Stearns, Lehman, Fannie Mae, Freddie Mac, or even Long-Term Capital Management ever achieved), and driving the monetary base to more than 18 cents for every dollar of GDP - a level that requires short-term interest rates to remain below about 3 basis points in order to maintain price stability ( see Charles Plosser and the 50% Contraction in the Fed's Balance Sheet ). The Fed was indeed successful in provoking a wave of commodity hoarding that affected global supplies and injured the poorest of the poor - particularly in developing countries. The Fed was successful in setting off a very predictable decline in the value of the U.S. dollar. The Fed was successful in punishing savers and the risk averse, and driving investors to reach for yield in risky investments that they would normally avoid were it not for the absence of yield. The Fed was successful in provoking those with strong balance sheets to pay down existing higher interest-rate debt, and in creating an incentive for those with weak balance sheets to issue more of it at low rates, resulting in a simultaneous deterioration of credit quality and compensation for risk in the financial system. The Fed was successful at boosting the trading profits of the banks that serve as primary dealers, by announcing precisely which securities it would be buying prior to Treasury auctions, and buying them on the open market a few days later from the dealers that acquired them. The Fed was successful in creating a portfolio of low yielding securities that will be almost impossible to disgorge without capital losses unless the Fed holds them to maturity. On proper reflection, the list of the Fed's successes from QE2 is nothing short of stunning.

It is beyond comprehension why anyone would wish for more of this recklessness.

If you go down that laundry list of accomplishments for QE2, you can see why Wall Street would want more Quantitative Easing, even though overall it failed. It was a failure in all economic and social aspects, but it did put money in a lot of investment bankers’ pockets (not to mention hedge fund and mutual fund managers). We should never count out the possibility that Karl Rove will drop all his policy and political scruples to cater to the Wall Street crowd. He is, after all, the biggest money raiser in the Republican Party, and they are the nation’s biggest source of political donations.

This, in fact, goes to the heart of the conundrum facing Republican Party leaders. The party has grown just as addicted as the American public to endless federal government borrowing, and the Tea Party contingent is now hacking root and branch at all the key constituencies of the party: the military, big business (finance, oil, and pharmaceuticals leading the parade), retired white people, farmers, and even Southern Baptists (where do you think they get their money for their sexual abstinence programs). Karl Rove doesn’t want the source of his power to dry up overnight.

The Tea Party people want to do exactly that, and Rick Perry needs their votes if he is going to have any hope of getting the party nomination. The ugly fact that the party leadership does not want discussed in the press is that the Republican Party is being split apart. At long last, the inconsistency in what it has always said (we are the party of fiscal sanity and conservatism) and what it has done at least since Reagan was president (ring up the nation’s worst deficits) has now ruptured the party in half.

This is why you have guys like Eric Cantor, the House majority leader and a Tea Party favorite, calling the shots for the Republicans even if it means burning traditional leaders like John Boehner and Mitch McConnell in the process. It is also why Rick Perry and other candidates for president (Michelle Bachmann attacked the Federal Reserve last week as well) cannot afford to play by Karl Rove’s rules.

Politics being what it is, there is also a deeply cynical interpretation that can be put on Rick Perry’s attack on the Fed. Notice closely the exact words Rick Perry used:

If this guy prints more money between now and the election, I don't know what y'all would do to him in Iowa, but we would treat him pretty ugly down in Texas.

I mean, printing more money to play politics at this particular time in American history, is almost treacherous, or treasonous, in my opinion.

The operative words here are, “to play politics at this particular time in American history.” What exactly did Rick Perry mean by that? The Fed certainly does not look at Quantitative Easing as some political gamble – it is supposed to benefit the economy, but not necessarily one political party over another. But looked at from the point of view of the Republican Party, QE3, even if it failed, might buy one more year of economic growth, and just enough time for Barack Obama to avoid facing a recession during an election year. In this light, it is easy to see how Rick Perry might see QE3 as unwarranted interference in a national election, and therefore a treasonable act.

Rick Perry is merely stating unofficial Republican Party policy. The Republicans want to do as much damage as possible to the economy to get Barack Obama out of the White House, but they don’t want their fingerprints on the handgun. Recession? Depression? Fine. Just make sure the voters blame the Democrats more than the Republicans.

Yes, it’s cynical, but it is typical for the Republicans. They play politics for keeps, and they are very good at it. They are keen for power. Unfortunately, they have no interest in proper governance once they get power, since they view government as evil and worthy of destruction, except when it is handing out money to their friends. They don’t abandon this viewpoint when they take control of Washington. Just think back to Donald Rumsfeld, Dick Cheney, Hank Paulson, and Heckuva Job Brownie.

Doubly unfortunately for America, the other party is pretty good at governance, but can’t play politics at all. In 2008 Democrats went to the polls thinking they were voting for Winston Churchill; instead they got Neville Chamberlain. The Democrats have become the party of appeasement.

This is, therefore, a lopsided battle that finds the Democrats at a significant disadvantage. This also means that the economy is going to continue to slide, from recession to depression, because the economy’s drug of choice – deficit spending – is being withdrawn. First it was federal government spending under attack, and now it is Federal Reserve spending under attack. That takes fiscal and monetary policy off the table when it comes to combating the natural tendency of the economy to sink under the burden of enormous government, corporate, and private debts.

The resulting carnage is going to be a lot uglier than anything Rick Perry or his Texans might do to Ben Bernanke. There is going to be significant collateral damage for most Americans, including many Republicans like Karl Rove and all those white retired Americans who dress up in patriot outfits and clamor for government spending cuts. But from the Republican perspective, it won’t be all bad. Barack Obama will be out of the White House.