Wednesday update.

On TGSN, Ralph Benko explains the gold-standard works best because it relies on the wisdom of crowds rather than a small group of bankers.

At RCM, John Tamny argues letting banks fail will correct bad behavior more effectively than new regulations.

On The Kudlow Report, Dan Mitchell suggests a government shutdown might be a victory for spending restraint:



In The WSJ, Alan Reynolds challenges the claim that business is hoarding $2 trillion (reprinted by The Cato Institute).

At Alhambra Investments, Joe Calhoun worries about the long run unless there is budget and tax reform and a stabilized dollar.

From The WSJ, George Melloan links the low dollar to world inflation and unrest.

About the only one failing to acknowledge a problem seems to be the man most responsible, Federal Reserve Chairman Ben Bernanke. In a recent question-and-answer session at the National Press Club in Washington, the chairman said it was "unfair" to accuse the Fed of exporting inflation. Other nations, he said, have the same tools the Fed has for controlling inflation.

Well, not quite. Consider, for example, that much of world trade, particularly in basic commodities like food grains and oil, is denominated in U.S. dollars. When the Fed floods the world with dollars, the dollar price of commodities goes up, and this affects market prices generally, particularly in poor countries that are heavily import-dependent. Export-dependent nations like China try to maintain exchange-rate stability by inflating their own currencies to buy up dollars.

Mr. Bernanke has made it clear that his policy is to inflate the money supply. His second round of quantitative easing—the controversial QE2 policy to systematically purchase $600 billion in Treasury securities with newly created money—serves that aim. But even for the U.S. it is uncertain that Mr. Bernanke can hold to his 2% inflation target. Oil is going up. Foodstuffs are going up. And when the Fed sneezes money, the weak economies of the world, and the poor masses who are highly vulnerable to price rises in the necessities of life, catch pneumonia.

At The NYT, David Leonhardt argues Keynesian spending has made the U.S. recession lighter than in austerity-focused nations.

On Capital Gains and Games, Bruce Bartlett recounts the taxes Ronald Reagan raised as governor and president.

From the archives, Bartlett revels in the success of supply-side economics.