Monday, November 15, 2010

Monday update.

Two remarkable mainstream media hits:

First, in The NYT, James Grant advocates return to the gold standard.

Second, on National Public Radio, Reaganite and American Principles Project director Jeffrey Bell supports a gold-backed dollar.

And, in a notable act of public dissent, economists oppose Ben Bernanke's quantitative easing. On CNBC, David Malpass discusses the letter:

On his blog, Bret Swanson praises the rise of the sound money coalition.

In The WSJ, Mary Anastasia O’Grady explains that dollar volatility is undermining Brazil’s market reforms.

Bloomberg reports Australia’s measures to raise its currency’s exchange rate against the dollar to stem inflation.

Also in The Journal, Victor Shih of Northwestern University explains that China’s dollar link is causing painful inflation:

China is seeing the highest price increases in over two years, and this has officials worried. While the official consumer inflation rate was 4.4% for October, a 10% rise in food prices is having a huge impact on poorer households. The domestic media is filled with stories of hoarding by both producers and consumers.

The government has responded with a small interest-rate increase and some hikes of the reserve requirement, though rates on demand deposits have not budged at all. More action is needed. A resolute drive to slow growth of the money supply will stop the hemorrhaging of household savings due to inflation. As an added bonus, it may also wean China off of its heavy dependence on investment-driven growth.

The recent bout of inflation may seem mild in comparison to the double-digit price rises in the 1980s and '90s. But the social impact may be almost as severe. According to research by a Chinese government think tank, poorer households now face inflation that is twice the overall rate because their consumption basket is dominated by food items, which have seen the most rapid price increases. So even though wage gains seem robust, many households are seeing flat or negative increases in purchasing power.
In Forbes, Reuven Brenner advocates fixed exchange rates and tax reform to reenergize the economy.

At Asia Times, David Goldman foresees a serious crisis from the falling dollar.

On The Kudlow Report, Bob McTeer discusses global currency tensions:

On NRO, Larry Kudlow sees good economic news in the short run.

At The NY Sun, Seth Lipsky recounts Henry Hazlitt’s sound money advocacy.

Also on Kudlow, Dan Mitchell debates Robert Reich on Congress’s next steps:

On Forbes, John Tamny raves about Bill Flax’s book on markets, The Courage To Do Nothing.

At Hugh Hewitt, Clark Judge summarizes a recent Art Laffer speech.

From the archives, Jude Wanniski recounts dollar reform efforts in 1987:
Having demonstrated the Mundellian process by which tax cuts and a stable dollar-gold price at an optimum level was a far superior policy framework than the monetarist formula, I believed it would be only a matter of a year or two before we would re-establish a dollar link to gold. The monetarists were indeed no longer a powerful force in policy circles, but the neo-Keynesians stepped up to argue against a price rule, on the grounds that they could do even better in the management of the economy with the flexibility of a managed currency. The closest we got to a dollar-gold link was in September 1987, when then-Treasury Secretary James Baker III proposed an international monetary reform that would link the major currencies together, with central banks using “a commodity basket, including gold” as a “reference point,” a term I gave Baker and his aide, Bob Zoellick, at the time.

1 comment:

  1. Paul Ryan was on Charlie Rose tonight, said "sound money" about 57 times.