Tuesday, March 15, 2011

Tuesday update: Domitrovic on SSE; Benko predicts the Fed will cost Obama his job; Goldman is bullish on Japan.

From Forbes, Brian Domitrovic exposes a flawed academic treatment of supply-side economics.

Also at Forbes, Ralph Benko predicts Federal Reserve tightening in the next 18 months will doom the President’s reelection.

On The Kudlow Report, David Goldman sounds bullish on Japan:

At The WSJ, George Melloan explains that rebuilding Japan’s destruction will not be economically stimulative.

From Forbes, Charles Kadlec links high oil prices to Federal Reserve policy.

In The Journal, Joel Kotkin notes that low tax, pro-oil North Dakota is booming:
The biggest impetus for the good times lies with energy development. Around 650 wells were drilled last year in North Dakota, and the state Department of Mineral Resources envisions another 5,500 new wells over the next two decades. Between 2005 and 2009, oil industry revenues have tripled to $12.7 billion from $4.2 billion, creating more than 13,000 jobs.

Already fourth in oil production behind Texas, Alaska and California, the state is positioned to advance on its competitors. Drilling in both Alaska and the Gulf, for example, is currently being restrained by Washington-imposed regulations. And progressives in California—which sits on its own prodigious oil supplies—abhor drilling, promising green jobs while suffering double-digit unemployment, higher utility rates and the prospect of mind-numbing new regulations that are designed to combat global warming and are all but certain to depress future growth. In North Dakota, by contrast, even the state's Democrats—such as Sen. Kent Conrad and former Sen. Byron Dorgan—tend to be pro-oil. The industry services the old-fashioned liberal goal of making middle-class constituents wealthier.

On Lew Rockwell, Andrey Dashkov notes rising interest in gold-backed money.

At AEI’s The American, Jay Weiser critiques gold-backed money:
Bullion-based systems have two major problems. First, supply is ordinarily fixed in the short term, creating deflationary pressure when economic activity expands: there is not enough coin to go around. As far back as the Middle Ages, bullion stocks were insufficient for commerce, not to mention costly to transport and safeguard. Before central banking, this led to currency debasement. As Carmen Reinhart and Kenneth Rogoff have documented, over centuries, the proportion of silver (the original European monetary base) in coinage inexorably dropped to a small fraction; by the 19th century it was quasi-fiat money….

Bullion production was uneven, creating a second major problem: huge swings in the monetary base unrelated to the rate of economic growth and the size of economies. Large discoveries triggered massive expansion and inflation, but when mines played out, sudden production drop-offs caused contractions—the opposite of Milton Friedman's prescription for a constant rate of monetary base growth. Early modern Spain is the poster boy: after its conquest of South America, the giant Potosí silver mountain fuelled inflation and imperial overstretch in a series of Reformation-era wars, followed by multiple bankruptcies when production decelerated around 1590, then declined in the 17th century. Similarly, the silver supply surge created by the mid-19th century discovery of Nevada's Comstock Lode generated Japanese inflation that helped topple the Tokugawa Shogunate.
On US News, Robert Schlesinger reports that Republican budget cuts would impact tsunami warning.

At The Washington Times, Richard Rahn advises the GOP to avoid the Washington Monument Ploy when reducing spending.

From House Republicans, a JEC report argues lower spending will help the economy.

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