Wednesday, May 26, 2010

Wednesday update.

In The WSJ, longtime supply-sider David Malpass seems to be positioning himself as a spending hawk rather than a growth advocate. He asks “What Would Reagan Do?”

When Ronald Reagan became president, the world had too much inflation, i.e., too much money chasing too few goods. Economists argued for higher taxes to sop up extra demand. Instead, Reagan chose to cut tax rates to encourage more output and pursued a strong-dollar policy. The result was more goods and a better balance between the supply and demand for the dollar. The malaise ended 18 months into his administration, with inflation declining gradually for nearly 20 years.

We now face a different, equally severe problem—too much government spending and debt. It is disrupting job growth and financial markets across the industrialized world. The current policy response is to keep interest rates super-low for big borrowers (saving governments billions at the expense of savers), increase government spending, and then apply large tax increases.

Liberal writer Harold Myerson calls for prosperity not austerity.

Currency experts Robert Mundell and Steve Hanke predict debt restructurings in some European nations.

At a Polish
monetary conference:

Nobel prize winner in the economy Professor Robert Mundell of Columbia University spoke about the need to create a stable exchange rate band between the euro and the US dollar, which would work as an anchor stabilizing the international monetary system. In his opinion the current weakening of the euro is the result of a speculative attack on the European currency.

At The American Spectator, Peter Ferrara
argues President Obama is following FDR’s gameplan.

Brian Wesbury and Robert Stein
don’t see copper’s decline as a sign of recession.

Steve Forbes
highlights positive reforms in Europe.

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