Monday, October 18, 2010

Weekend round up.

In a must-read WSJ piece, Judy Shelton interviews supply-side founder Robert Mundell. The Atlas Sound Money Project features the full text:

“Are you thinking,” I venture, “that maybe it’s time to start figuring out the design for a new international monetary order? Should the U.S. offer new proposals regarding exchange rates and monetary policy?”

Mr. Mundell, who is Canadian, looks troubled. “I don’t think the U.S. has any ideas, they don’t have strong leadership on the international economic side,” he replies. “There hasn’t been anyone in the administration for a long time who really knows much about the international monetary system.”…

“The U.S. berates China for its exchange rate policy, which Washington doesn’t like,” Mr. Mundell says, noting that discriminatory tariffs against China might not be legal under the treaty provisions of the World Trade Organization. “But one-sided pressure on China to change its exchange rate is misplaced.”

Shaking his head, Mr. Mundell asserts: “The issue should not be treated as a bilateral dispute between the U.S. and China. It’s a multilateral issue because the U.S. deficit itself is a multilateral issue that is connected with the international role of the dollar.”

He goes on to explain that the dollar bloc includes China and other Asian countries—except Japan—but that the euro now constitutes the rest of the world.

“The euro today is the counter-dollar,” he says. “The most important initiative you could take to improve the world economy would be to stabilize the dollar-euro rate.”

The WSJ editorializes on Fed Chairman Bernanke’s lack of attention to the falling dollar.

We were more struck by what Mr. Bernanke didn't say. In a nearly 4,000-word speech about inflation, the Fed chief never once mentioned the value of the dollar. He never mentioned exchange rates, despite the turmoil in world currency markets as the dollar has fallen in anticipation of further Fed easing. He never mentioned rising commodity prices or soaring gold, and his only reference to the recent increase in the price of oil was by way of dismissing it in the context of overall low inflation.
On Fox, Steve Forbes suggests the mortgage market has been nationalized:

At Bloomberg TV, David Malpass
calls the U.S. a currency manipulator and says the current administration is following GW Bush’s weak dollar policy. Interestingly, he suggests the weak dollar since 2004 has driven investment capital overseas, contributing to a rising trade deficit, the opposite of the mainstream view. He also predicts the Bush tax cuts will not be extended.

Seeking Alpha
summarizes a recent presentation on the economy by Dr. Victor Canto.

On CNN, Stephen Moore
debates economic policy:

Foreign Policy
analyzes the power struggle among China’s rulers.

Cato’s Dan Mitchell
suggests Calvin Coolidge was the best President of the last 100 years.


  1. I like Dinar.and its revaluation of currency.

  2. Mundell says: “The most important initiative you could take to improve the world economy would be to stabilize the dollar-euro rate.”

    Well that sounds like a simple solution! Only the reason why the Euro is outpacing the USD is because the world is gaining faith in the Euro and losing faith in the USD. Too many people have been burnt and they're not interested in going there again. Be looking for a 50 cent USD against the Euro in as little as a year. Any other ideas Mr. Mundell?