Monday, May 24, 2010

Monday update.

Today, the National Association for Business Economists predicted GDP growth of 3.2 percent in 2010 and 2011. While this rate is certainly better than recent years, it should be remembered that after a deep recession, the economy requires 7-8 percent growth for a year or two to reduce unemployment. When he was interviewed last month by Larry Kudlow, Prof. Robert Mundell called four percent growth this year and next “awful” and “terrible,” and said “that’s not anything like enough to bring the unemployment rate down,” (at 7:25).

Larry Kudlow says the dollar’s sharp rise on forex has stopped inflation in its tracks.

John Tamny argues that a U.S. debt default would be a good thing.

Steve Hanke, architect of Bulgaria’s currency board system, suggests that nation isn't ready to join the European Union.

The Foundation for Economic Education is running a 1977 article by libertarian economist Henry Hazlitt that argues high deficits cause inflation.

Supply-sider Nathan Lewis disagrees here, here, here and here.

At National review Online, Avik Roy defends the gold standard.

Apropos Kevin Williamson’s recent Goodbye Supply Side article, when I reviewed the Kudlow/Mundell interview above, I noticed that the first thing Mundell says is, “Of course you can’t say that all… lower tax rates will increase revenues, but at a certain point on the [Laffer] curve, when tax rates get up to very high levels, there will be a tax rate at which a lower tax rate will increase revenues. There’s a maximum point on that curve.” In other words, Williamson knocked down a view not held by supply-side’s founding father.

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