Bernanke gold responses.

The Federal Reserve features Ben Bernanke’s recent anti-gold standard speech:



Select responses:
Ralph Benko (1)
Benko (2)
Benko (3)
Benko (4)
John Tamny
Nathan Lewis
Rich Danker
Douglas French
George Selgin
Jacob Hornberger
Mike Shedlock
James Pethokoukis
Victor Sperandeo

Thursday items: Sirico on the Vatican's economic statement; Woodhil and Moore on competing tax proposals; O'Grady and Epstein on inequality.

From The WSJ, Fr. Robert Sirico explains the Vatican’s recent linking of the current economic crisis to Bretton Woods’ breakdown.

At Forbes, Louis Woodhill compares the tax plans of Cain, Perry and Romney.

In The WSJ, Stephen Moore wonders if Gov. Romney will introduce his own tax reform plan.

On The WSJ, Mary Anastasia O’Grady rebuts wealth inequality arguments:



From Alhambra Partners, John L. Chapman highlights the work of Art Laffer and the new Laffer Center.

At RCM, John Tamny exposes GDP’s flaws.

In Forbes, Rich Danker reviews Lew Lehrman’s gold standard transition plan.

On NRO, Larry Kudlow analyzes the European debt deal.

The WSJ worries about the World Bank’s new “Doing Business” report:

In 2007, the U.S. ranked third in the "ease of starting a business" category. This year it ranks 13th. On the "paying taxes" front we've dropped to 72nd place from 63rd. The cost of starting a business, measured as a percentage of per capita income, has doubled to 1.4% from 0.7% in 2007. On "ease of registering property" the U.S. has dropped to 16th from tenth. In the "trading across borders" category, we've dropped nine spots to 20th. In 2007, the "cost to import," as measured in dollars per container, was $625. Today it's more than doubled to $1,315.

PBS features Richard Epstein discussing inequality, tax rates, and transfer payments (h/t: Randy Barnett):



From Bloomberg, Amity Shlaes argues a capital gains tax cut would spur jobs.

Steve Forbes suggests Occupy Wall Street focus its anger on the Fed.

Wednesday round up: Danker and The Economist on China; Lehrman on transitioning to gold; The NY Sun says Paul won the debate.

From Forbes, Rich Danker explains the Chinese trade deficit is more a function of the dollar’s reserve status than currency manipulation.

The Economist notes that as China’s currency has risen, so has its trade deficit.

At The Washington Examiner, Lew Lehrman summarizes the steps to get to a gold standard.

On The Kudlow Report, a panel discusses Herman Cain’s rise in the polls:

 

The NY Sun argues US Rep. Ron Paul (TX) won last night’s debate due to his monetary answers.

At a press conference, Cain doesn’t sound like a monetary reformer:

“Representative Paul wrote a book called ‘End the Fed.’ I believe we can fix the Fed,” Cain said. “Because when I ask the Ron Paul people, ‘what would you replace it with?’ they don’t have an answer.”

Cain said he is falsely accused of opposing an audit of the central bank.

“As far as auditing the Fed, in the vernacular of my grandfather, I does not care,” he said, quickly slipping into the third person. “But what Herman Cain has said is, ‘It’s not going to be one of my top issues … If members of Congress were to get together and bring me legislation to audit the Fed, I’d sign it. But I don’t have a problem with it. Now, that being said, you don’t need the president to sign a bill to audit the Fed. Representative Paul sits on a committee that already has that authority!”

On International Liberty, Dan Mitchell scrutinizes Cain’s 9-9-9 tax plan.

Politico features an analysis of Cain’s tax plan by supply-sider Gary Robbins, who predicts it would stimulate strong growth (h/t: Bretton Woods Research).

At First Trust, Brian Wesbury and Robert Stein see reason for economic optimism.

The WSJ quotes from Larry Lindsey’s The Growth Experiment (1990):

[The Economic Recovery Tax Act of 1981] did not pay for itself as some of the most enthusiastic supply-siders claimed it would. Personal income tax collections were lower under ERTA than they would have been had tax rates never been cut. . . . However, the reductions in very high tax brackets easily paid for themselves and produced a rather sizable increase besides. This increase helped finance a large part of the reduction in taxes from lower- and middle-class taxpayers. Though this is not what some enthusiastic supply-siders predicted during the political fight for the tax cuts, it is what basic supply-side theory would predict. . . .

Putting theory to one side for a moment, were the Reagan tax cuts a good idea? More specifically, could the country afford them? By 1985, at a revenue cost in that year of $33 billion, economic output was between 2 and 3 percent higher than it would have been without the tax cut. That extra growth stands for millions of new jobs and a higher standard of living. Moreover . . . the tax cuts had salutary effects on inflation, investment, and savings and contributed only marginally to the deficit.

By the standards of government programs this one would have to be judged a bargain.

In The WSJ, Peter Wallison blames federal programs but not the weak dollar for the subprime mortgage mess.

At Slate, William Saletan notes Mitt Romney’s liberal answers in last night’s debate.

The WSJ suggests the latest economics Nobel Prize was for supply-side economics:

 

The Atlas Sound Money Project reports on last week’s Heritage conference on a stable dollar.

At COAL, Paul Krugman argues Keynesianism has been validated by the current crisis.

Thursday round up: Perry wants greater Fed transparency; Laffer chides Laffer; Kudlow sees the M2 rise as deflationary.

The NY Sun praises Gov. Rick Perry’s (TX) Federal Reserve criticism but hopes he will deepen his analysis.

In USA Today, Jeff Bell lauds Perry’s comments.

The WSJ commends Perry for taking a hard money stance.

Meanwhile, The Washington Post quotes Perry sounding defensive about his comment and explaining that his main desire is for greater Fed transparency.

On Squawk Box, Art Laffer chides Warren Buffett and provides a primer on his famous curve:




At Forbes, Tim Worstall rebuts Buffett’s tax argument.

On NRO, Larry Kudlow suggests the sharp rise in M2 suggests deflationary hedging against European banks.

From Forbes, Louis Woodhill explains why a 10 to 1 spending-cut-to-tax-increase ratio would still be a bad deal.

In The WSJ, Stephen Moore notes the President blaming world events and Republicans for the weak economy.

On The Kudlow Report, David Malpass discusses today’s market tumble and Europe’s banks:




Gold Standard 2012 features an International Economy article by Jeff Bell on the dollar and gold.

At Fox News, Rich Danker notes Venezuela’s nationalizing of its gold industry.

CNN reports US Rep. Michelle Bachmann (MN) promising to bring gas back to $2 per gallon.

On Forbes, John Tamny finds economic lessons in a book on the restaurant business.

At International Liberty, Dan Mitchell analyzes strange Keynesian arguments.

Weekend edition: Danker links the debt downgrade to fiat money; Pawlenty withdraws; Ferrara sees a crash coming.

From The Des Moines Register, Rich Danker suggests the S&P debt downgrade is the inevitable result of leaving the gold standard 40 years ago.

The LA Times reports growth advocate Tim Pawlenty’s withdrawal from the Republican presidential race.

At NRO, Larry Kudlow interviews Sen. Pat Toomey (PA) about a grand bargain on the debt and taxes.

On The Kudlow Report, James Pethokoukis analyzes the GOP debate:




At RCP, US Rep. Ron Paul (TX) advocates a gold standard at last week’s GOP debate.

On The Washington Monthly, Steve Benen expresses astonishment that the gold standard is being discussed by Republican candidates.

From Forbes, Peter Ferrara predicts the end of loose monetary policy, combined with new Obamacare taxes and the Bush tax rates’ expiration, will cause an economic collapse in 2013.

On Fox Business News, Steve Forbes suggests bond yields will rise due to higher borrowing and the low dollar:




In The WSJ, Glenn Hubbard advocates tax reform to get the economy moving.

On The American Spectator, John Berlau chides Europe for suspending short sales.

At New World Economics, Nathan Lewis ties tax and monetary error to the rise and fall of great nations.

On CNN, Paul Krugman wishes for an alien invasion that would justify increased government spending and expansionary monetary policy.




The Washington Post reports that after months of deficit obsession, the House Republican majority looks vulnerable.

At Forbes, Reuven Brenner suggests educational reform to get the US growing again.

Reason asks various experts how to fix the economy. Only Amity Schlaes zeroes in on monetary reform as the top priority. Notably, former supply-sider Bruce Bartlett argues the US is in a Keynesian liquidity trap requiring inflation and increased government spending.

Monday update: Shelton advocates the gold standard and Kristol affirms; Lewis on the capital-to-labor ratio; Kudlow: Reid's proposal a victory.

From The Weekly Standard, Judy Shelton makes the case for returning to the gold standard.

At The Standard’s blog, Bill Kristol extends Shelton’s argument:

So when we get through the debt ceiling negotiations, and as Republicans continue to focus on the big changes that need to happen in fiscal and tax policy, some of them might want to turn their attention to the third leg of the economic stool—monetary policy.

On New World Economics, Nathan Lewis explains the importance of raising the capital-to-labor ratio.

At NRO, Larry Kudlow sees the Reid debt proposal as a victory for conservatives.

On The Kudlow Report, James Pethokoukis debates the debt ceiling:




In The WSJ, Stephen Moore chides Democrats for their newfound fondness for President Reagan.

At Forbes, John Tamny gives a positive review to William R. Rhodes’ Banker to the World.

On TGSN, Ralph Benko notes the Swiss Parliament’s interest in relinking its currency to gold.

Kudlow reports Mitt Romney’s front-runner status:




At NRO, Ramesh Ponnuru calls Romney’s rise “a marriage of convenience.”

On Forbes, libertarian Timothy Lee doubts the inflation warnings of many free-market economists, but omits supply-side guru Robert Mundell from his list of prominent inflation doves.

In The Economist, Will Wilkinson notes Lee’s skepticism and remembers Milton Friedman’s deflationary analysis of the Great Depression.

At COAL, Paul Krugman also cites Lee and argues John Hicks’ Keynesianism has predicted correctly the current crisis.

On Forbes, Ralph Benko scolds the President for scare tactics and a proposed tax increase as part of the debt ceiling negotiation.

At Forbes, Rich Danker reports the legislative beginning of a modern gold standard.

Friday items: Woodhill discounts the Dow for gold; Lehrman and Grant testify on monetary policy; Geithner supports a world reserve currency.

From The Weekly Standard, Lewis Lehrman argues for a gold-backed dollar.

At Forbes, Louis Woodhill measures the Dow against the gold price.

U.S. Rep. Ron Paul (TX) held hearings yesterday on Federal Reserve policy and rising prices, featuring Lewis Lehrman and James Grant:



(Parts 2-8 of the hearing, here, here, here, here, here, here and here.)

(Lehrman’s written submission here, Grant’s here. H/t: Ralph Benko, Rich Danker.)

The Telegraph (UK) reports world markets were stunned by Treasury Secretary Tim Geithner’s suggestion that the U.S. supports a global reserve currency.

From last week, The WSJ recounts a hapless Fed official’s explanation to working people that price inflation is under control.

So Mr. Dudley tried to explain that other prices are falling. "Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said. "You have to look at the prices of all things."

Reuters reports that this "prompted guffaws and widespread murmuring from the audience," with someone quipping, "I can't eat an iPad." Another attendee asked, "When was the last time, sir, that you went grocery shopping?"

At RCM, Cato’s Kevin Dowd and Martin Hutchison tie dollar volatility to the recent boom/bust cycles and suggest investors are pulling out of the U.S. as a result.

From Future of Capitalism, Ira Stoll notes the Ways and Means Committee Chairman wants a top tax rate of 25 percent.

At Democracy Journal, supply-side critic Jonathan Chait laments the GOP’s refusal to raise tax rates.

We can identify three phases of supply-side craziness in Republican Party history. In phase one, the Republican establishment greeted supply-side economics with incredulity. The messianism and insouciant disregard for sound fiscal principles sounded more like a nutty left-wing scheme than anything a Dwight Eisenhower or even a Barry Goldwater might recognize. George H.W. Bush called it “voodoo economics.” A great blaze of tax cutting at the outset of the Reagan presidency quickly produced massive deficits, and the Reagan Administration — still dominated by an older generation of Republicans — quickly retrenched. It quietly raised taxes in 1982 and 1983, and then in 1986—aghast at the massive corporate tax loopholes that had grown out of its initial tax cuts—agreed to a tax reform that, even in the course of lowering nominal rates, shifted a larger share of the tax burden onto the rich by sweeping the tax code of subsidies for the wealthy.

Through the next decade, in phase two, the Republican Party stayed committed to anti-tax absolutism in rhetoric, but it remained largely tethered to fiscal reality in practice. In 1990, George H.W. Bush agreed to a major deficit-reduction package, including substantial spending cuts, in return for a small hike in the top marginal income tax rate, from 28 to 31 percent….

Which brings us to phase three. Over the last 20 years, the penetration of taxophobia within the Republican Party has been total. Reducing taxes, especially taxes on the rich, has been enshrined as the party’s unquestioned central policy goal. Virtually all Republicans at the national level have signed a pledge concocted by anti-tax fanatic Grover Norquist pledging never, under any circumstances, to support higher taxes. No such pledge exists for spending.

On Forbes, Peter Ferrara suggests Social Security accounts are still a viable option.

From Fiscal Times, Bruce Bartlett argues Tea Party Republicans are blowing it by focusing on small, unpopular budget cuts.

Weekend round up: Lewis on currency boards; Danker on Utah's hard money legislation; Mitchell opposes raising taxes to lower the deficit.

From Forbes, Nathan Lewis argues that a currency board system tied to a specific gold price would fix the dollar.

Also at Forbes, Rich Danker suggests Utah’s bill to make gold and silver legal tender is the first tangible evidence of a populist revolt against Washington's weak dollar policy.

On The Kudlow Report, Stephen Moore discusses high oil prices:



At Forbes, Bill Flax links high oil prices to the weak dollar.

From New World Economics, Nathan Lewis continues his analysis of bank reserves.

Cato’s Dan Mitchell supports Grover Norquist’s argument that higher taxes will not lower the deficit.

At Heritage, David Weinberger cites Alan Reynolds on income inequality:

First, as Reynolds points out, shifting tax rates have influenced how income has been reported to the IRS. For example, after individual tax rate reductions throughout the 80s and 2000s, businesses shifted from corporate tax returns to individual tax returns, since they would pay less in taxes shifting income to the lower individual rate. This resulted in increased reported income at the top, when in reality there was a lot of income shifting – though not necessarily gaining – which Reynolds found to account for “more than half of the
apparent increase in the top 1 percent’s income share since 1986.”

Second, Reynolds argues that the Piketty-Saez tax return study excludes many transfer payments for low-income families, because these payments don’t show up in IRS data. These include things like Social Security, Medicare, food stamps and other lower-income subsidies. Excluding these payments shrinks the percentage of total income for lower income groups, making it appear to expand the percentage of total income top earners collect. Of course, employer health care contributions, which tend to favor upper-income earners and therefore offset some of the transfer payments to lower-income individuals, also need to be taken into account. But overall, middle- and lower-income earners receive
more subsidies than upper-income earners.

Third, tax rates also affect capital gains realizations. Prior to the 1987 capital gains tax increase, capital gains accounted for “18 percent or less of all the broadly defined income reported on the top 1 percent of individual income tax returns in the early 1980s,” according to Reynolds. However, starting in 1987, capital gains realizations as a share of the top 1 percent of incomes dropped to an average of 7.3 percent for the next decade.

From Cato, Robert F. Mullgan reports the institute's William Niskanen is working to rehabilitate the Phillips Curve.

On Forbes, Reuven Brenner suggests government art subsidies weaken the culture.

At Fiscal Times, Bruce Bartlett reviews Douglas Irwin’s Peddling Protectionism on the Smoot-Hawley tariff.

Thursday items: Kudlow on the market dip; Norquist opposes a deficit grand bargain; Utah's Senate passes the gold-as-legal-tender bill.

At NRO, Larry Kudlow examines the factors behind today’s market dip.

From The Washington Post, Ezra Klein interviews conservative activist Grover Norquist on his efforts to prevent a grand bargain on the deficit that would include tax increases. (H/t: Future of Capitalism.)

On CNBC, Dan Mitchell debates inflation debate in the U.S. and Europe:



At Forbes, Jerry Bowyer suggests it is troubling that more U.S. production occurs overseas.

The Salt Lake Tribune reports the Utah Senate has passed the bill making gold legal tender bill in the state. (H/t: Rich Danker).

On The American Interest, Walter Russell Mead challenges Paul Krugman’s solutions to labor market uncertainty.

We have our naysayers and prophets of doom in the US, and many of our intellectuals are so caught up in and so well paid by the blue social model that they literally cannot conceive that the radical changes shaking their world should be embraced rather than resisted. But one of the great secrets of America’s historical success is that the voices of nostalgia are weaker here than in other places.

Krugman and many of his colleagues at the Times are, I think, blinded by how good things once were. This is understandable; I felt that way for many years myself and it was only slowly and painfully that I gave up on the blue social model that once looked so good. But the country and the times we live in demand more than angry and ultimately despairing nostalgia from our thinkers and opinion leaders. Let us hope that it comes.

From Project Syndicate, Barry Eichengreen notes that China’s growth may be slowing.

Former FDIC Chairman William Isaac ties the high price of farmland to the undervalued dollar. (H/t: Vlad Signorelli.)

Wednesday items.

At Yahoo Finance, John Tamny debates Gary Shilling on inflation.

From Forbes, Rich Danker notes President Reagan’s unsuccessful effort to restore a gold-backed dollar.

On The Kudlow Report, Stephen Moore endorses entitlement cuts:



At Asia Times, David Goldman advocates a higher Fed funds rate.

On The Daily Reckoning, Charles Kadlec connects Egypt’s unrest to the dollar’s decline.

World Bank President (and sound money advocate) Robert Zoellick notes high food prices may push one billion people into hunger.

From the Institute for Humane Studies, Prof. Steve Horwitz refutes the claim that the poor are getting poorer:



At Daily Finance, Joseph Lazzaro makes the crucial points that exports are rising, but the trade deficit is also rising due to oil’s high price. Unfortunately, he goes on to argue the yuan should rise significantly which would likely lower the dollar, thereby raising oil even more.

From Heritage, Derek Scissors argues yuan convertability is more important than revaluation.

In The Pittsburgh-Tribune Review, Don Boudreaux explains different views of inflation, though he doesn’t use Robert Mundell’s formulation that inflation is a decline in the monetary standard.

On Capital Gains and Games, Bruce Bartlett cites a poll showing weak support for big spending cuts.

Monday update.

On RCP, U.S. Rep. Paul Ryan (WI), Congress’s leading supply-sider, argues spending restraint is what the economy needs most.

At Forbes, Jeff Bell chides Republicans for focusing on the deficit rather than on the weak and volatile dollar (h/t: Rich Danker).

On The Kudlow Report, U.S. Rep. Ron Paul (TX) talks monetary policy and China:




At Forbes, John Tamny explains the flaws in Fed Chairman Bernanke’s recent inflation comments.

The NY Sun editorializes on James Grant’s warnings about the dollar.

On The Gold Standard Now, Ralph Benko notes that a gold-backed dollar is honest money.

In The WSJ, Stephen Moore summarizes the relative size of recent spending increases:




At Bloomberg, Kevin Hassett applies the Laffer Curve to the corporate income tax.

In The NY Times, Greg Mankiw notes that economic growth is not a zero sum game.

Cato’s Dan Mitchell highlights the Reagan and Clinton presidencies as successful models of how to slow spending relative to growth.

Tuesday round up.

On Forbes, Jeff Bell and Rich Danker make a strong case for the economic and political viability of a gold-backed dollar.

Yet most sympathetic politicians, policymakers and academics shy away from embracing gold. A common refrain is lack of voter knowledge, and there is some truth to this. In focus groups of Democrats and Republicans that we observed over the summer in Cincinnati, most participants had come of age after Bretton Woods and therefore had no living memory of gold playing a central role in monetary policy. But they did comprehend the gold standard when it was explained to them (a third session in Cincinnati with Tea Party activists elicited surprising levels of historical knowledge and support).

Even if they have never heard of the price-specie-flow mechanism, voters have an increasing sense of how the gold standard works because there is an intuitive association of gold with money. A system that last fully operated before World War I is more transparent and understandable than the monetary regime we live under today, dictated by central bankers making policy according to their macroeconomic preoccupations. The monetary authorities themselves do not understand the impact of their decisions on the wider world, where foreign central banks recycle excess reserves into U.S. dollar-denominated debt that artificially boosts asset prices and generates recurring bubbles below the radar of inflation.

At Alhambra Investments, Joe Calhoun sees economic negatives outweighing positives, unless spending and the tax system are reformed.

On The Kudlow Report, former Atlanta Fed President William Ford explains that rising interest rates could render the U.S. central bank insolvent:



Apropos my recent article, The Washington Times reports on President Obama’s meeting with President Sarkozy of France to discuss the dollar and the euro.

Mr. Sarkozy repeatedly has warned of the dangers to international firms posed by disparities between the euro and the dollar, and has suggested that reliance on the dollar as the world's sole reserve currency exacerbated the financial crisis.

The French leader has called for "updating" the global monetary order — something he's now pursuing as he holds the revolving presidencies of the Group of Eight and the Group of 20 nations. But, at least in his public comments alongside Mr. Obama, he avoided pointed rhetoric challenging the dollar's status.

"I've always been a great friend, a tremendous friend of the United States, and I know how important a role the Unites States plays in the world, how important the U.S. dollar is as the world's No. 1 currency," Mr. Sarkozy told reporters following an Oval Office meeting with Mr. Obama.

At the International Economic Law and Policy blog, Simon Lester reports on papers by John Williamson of the Peterson Institute, and conservative Keynesian Martin Feldstein of Harvard, on how to deal with trade imbalances (here and here).

The WSJ editorializes on a new study illustrating why trade deficit fears are overblown.

From The WSJ, former Fed Chairman Alan Greenspan advocates higher taxes and denies any mistakes in monetary policy during his tenure:



Cato’s Dan Mitchell suggests taxpayers will flee tax Illinois’s tax increases.

At Foreign Affairs, Columbia’s Robert C. Lieberman argues government policy favors the rich getting richer.