Thursday, November 4, 2010

Thursday round up.

At The Washington Post, Fed Chairman Bernanke justifies yesterday’s decision to add $600 billion to the economy.

The NY Sun editorializes that the dollar’s value will predict the fate of the Boehner Republicans.

On The WSJ, Dan Henninger argues Republicans should focus on economic growth over spending cuts:

At Asia Times, David Goldman outlines why quantitative easing won’t work.

On NRO, Larry Kudlow suggests stopping bad ideas may be the best outcome of the Republican House.

The WSJ editorializes against quantatative easing:
The Fed first tried QE, as it's called, with $1.75 trillion of bond purchases starting in December 2008, but that was at the height of the financial panic when markets were frozen. The Fed's justification for this current round is that inflation is too low and growth too slow to reduce unemployment. The Fed promised to buy $600 billion in bonds for starters, and to keep buying until the rate of inflation rises, presumably above its 2% target.

This is a terribly risky strategy for what we expect will be little economic gain. The Fed hopes the policy will have the effect of reducing long-term interest rates by 25 to 50 basis points or more, but the 10-year Treasury bond is already near historic lows. Marginal business borrowers aren't worried about the price of money; they're worried about the vagaries of economic policy. QE2 only adds to this uncertainty, as the Fed expands its role into fiscal policy and credit allocation.

Meanwhile, Mr. Bernanke's monetary cowbell will flow into higher commodity prices and other assets, perhaps leading to more bubbles. It has already caused havoc around the world, as investors flee the dollar for other currencies. Dollar-bloc countries are already seeing an increase in their price levels and several are contemplating capital controls.
In The Financial Times, U.S. Rep. Paul Ryan (WI) emphasizes growth – including sound money.

On The Kudlow Report, Brian Wesbury sees the Fed funds rate as too low and likely to lead to inflation:

At Forbes, Steve Forbes suggests provisions to change in Obamacare.

From the Mises Institute, Austrian Robert Murphy challenges "60 Minutes" on taxes.

Australia’s discusses the effect of tax rates on the Rolling Stones (H/T: Greg Mankiw):
The Stones are famously tax-averse. I broach the subject with Keith in Camp X-Ray, as he calls his backstage lair. There is incense in the air and Ronnie Wood drifts in and out--it is, in other words, a perfect venue for such a discussion. "The whole business thing is predicated a lot on the tax laws," says Keith, Marlboro in one hand, vodka and juice in the other. "It's why we rehearse in Canada and not in the U.S. A lot of our astute moves have been basically keeping up with tax laws, where to go, where not to put it. Whether to sit on it or not. We left England because we'd be paying 98 cents on the dollar. We left, and they lost out. No taxes at all. I don't want to screw anybody out of anything, least of all the governments that I work with. We put 30% in holding until we sort it out." No wonder Keith chooses to live not in London, or even New York City, but in Weston, Conn.

Of course, it wasn't just the taxman's pinch that forced the Rolling Stones to focus on the bottom line. They also got screwed by record labels. "In the early days you got paid absolutely nothing," recalls Jagger. "The only people who earned money were the Beatles because they sold so many records."

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