Thursday round up: Woodhill discounts the Dow; Pethokoukis on growth; Feldstein on European debt.

From Forbes, Louis Woodhill discounts the stock market against gold.

At The American, James Pethokoukis highlights a debate over economic growth.

In The WSJ, Martin Feldstein hopes bond vigilantes will discipline Europe’s government spending.

On The Kudlow Report, Art Laffer argues spending cuts would lead to stronger economic growth:



At Townhall, John Stossel promotes a free market in currency.

Author Jeremy Hammond compares economic analyses from US Rep. Ron Paul (TX) and Keynesian Paul Krugman.

The Houston Chronicle reports a speech by Art Laffer.

From Newsmax, Steve Forbes predicts return to recession if the President is re-elected.



From The Atlas Sound Money Project, Nicolas Cachanosky critiques the government’s dollar management.

Thursday items: Malpass on the rising dollar; Shlaes on austerity; Forbes on NR's opposition to Newt.

From Forbes, Chris Barth reports David Malpass argues the dollar should rise due to tighter money, not the falling euro.

In Bloomberg, Amity Shlaes challenges Paul Krugman on fiscal austerity.

A reader comments:
Amity Schlaes pens an austerity-can-lead-to-growth op-ed, dismissing Paul Krugman's call for more Keynesian spending, but commits a startling error:

...There is evidence that austerity did lead to growth in the past, and that it did not cause fascism. These examples may be less known, but they suggest that austerity can bring recovery faster than spending can.

A strong example in U.S. history is the recession of the early 1920s. Responding to a downturn, the federal government didn't spend; it cut itself in half. Recovery followed so rapidly few people even remember that recession.

Brian Domitrovic has written how there was virtual consensus between Presidents Wilson's and Harding's money men on reducing top marginal rates before the election, so how could Shlaes forget Mellon’s tax cutting agenda that kicked off the Roaring Twenties? The Revenue Act of 1921 brought the top marginal tax rate down to 58% in 1922 from 73%, and with subsequent reductions, Mellon was able to get that top tax rate down to 25% by 1925. The austerity of the 1920s did not take place without efforts to foster economic growth. In this, Shlaes was sloppy.

On NRO, Larry Kudlow reports Senate Minority Leader Mitch McConnell (KY) pushing for the Keystone Pipeline in exchange for the payroll tax cut.

On The Kudlow Report, Steve Forbes discusses National Review’s editorial opposing Newt Gingrich:



From Forbes, Louis Woodhill argues pro-growth policies explain Gingrich’s rise.

At The American, James Pethokoukis suggests Gingrich’s Iowa lead is softening.

In The American Spectator, Ben Stein predicts President Gingrich and Vice President Huntsman.

At The WSJ, Dan Henninger portrays Gingrich as Mitt Romney’s sparring partner, toughening the former governor up to debate President Obama.

On NRO, Elise Jordan sees Jon Huntsman failing to capitalize on recent opportunities.

At Forbes, Jerry Bowyer highlights the role of interest rates to functional economic and financial systems.

From First Trust, Brian Wesbury predicts unemployment will be down to 8% by Election Day.

On The WSJ, Steve Cortes argues the Chinese economic model won’t work in the long run:



In The WSJ, conservative Keynesian Martin Feldstein pans the Eurozone economic deal.

On C-SPAN, PIIE’s C. Fred Bergsten – Keynesian and key intellectual driver of the 1970s dollar devaluation and subsequent Great Inflation – argues more American jobs will come from rebalancing world trade by lowering the dollar’s exchange rate to a competitive level (around minute 13).

Wednesday round up: Stoll, Bolduc and Costa on Gingrich; Jenkins on Romney; CNN reports the euro falling below $1.30.

From The NY Sun, Ira Stoll suggests Newt Gingrich has surged in part because his tax policies are superior to Mitt Romney’s.

In The WSJ, Holman Jenkins Jr. argues the nation needs a problem solver like Romney.

At NRO, Brian Bolduc reports that Gingrich saw supply-side economics' political potential early, but wasn’t deeply interested in the economic details.

On The Kudlow Report, Robert Costa discusses US Rep. Paul Ryan's (WI) critique of Gingrich for not edorsing unpopular entitlement reforms:



CNN notes the euro falling below $1.30.

The WSJ highlights the rise of regulation under the current administration.

At Forbes, Bill Flax argues pending tax increases and regulation are strangling business.

In IBD, Jim Gilmore proposes interesting pro-growth ideas but omits dollar stability.

On CNBC, John Carney cites Jude Wanniski’s view that budget deficits should be considered relative to the total size of the economy.

From First Trust, Brian Wesbury and Robert Stein see the economy improving and doubt the Fed will enact QE3.

On CNN, Stephen Moore argues unemployment benefits go on too long:



At The Freeman, the late great Julian Simon supports immigration.

In The Washington Post, Charles Lane highlights conservative Keynesian Martin Feldstein’s long-standing opposition to the euro.

From the archive, Feldstein advocates dollar “competitiveness” via a lower exchange rate.

Wednesday summary: Domitrovic on the Fed's dual mandate; Malpass on Operation Twist 2011; Forbes predicts Perry will beat Obama.

From Forbes, Brian Domitrovic notes the Federal Reserve’s dual mandate isn’t contradictory as a weak dollar coincides with higher unemployment.

In The WSJ, David Malpass critiques the Fed’s updated Operation Twist:

The modern version [of the Twist] would probably be even less effective since markets are expecting it. The Fed's idea is that the private sector will go looking for riskier and longer duration assets to make up for the bonds the Fed bought. But the evidence is clear that this isn't working: The Fed's near-zero interest rate policy and its huge overhang of bonds create uncertainty. This hurts small-business confidence and discourages job growth.

The twist from the second round of quantitative easing (QE2) contributed to the sharp economic slowdown in the first half of 2011 when the Fed was buying $70 billion in bonds per month. The more it bought, the slower the economy grew as the twist sucked capital from savers and small businesses to the government.
The Fed has conducted a controversial experiment with near-zero interest rates and massive bond purchases. These policies have hurt growth and added to unemployment by distorting financial markets.

At CNN, President Clinton argues Republican policies do not create prosperity:



The NYT reports the Republican congressional leadership opposing additional Federal Reserve stimulus.

On The Daily Ticker, Steve Forbes predicts Rick Perry will beat President Obama.

From Alhambra Partners, Joe Calhoun dissects public opinion on taxes and spending.

In The WSJ, Jonathan Anderson explains why China is still a financial midget despite its fast growth:

The bigger problem is that China can't open its capital regime, at least not fast enough to matter. For more than two decades, China's philosophy of monetary management and financial development has been based on a closed-economy system: maintaining low and stable interest rates without having to worry about external arbitrage, breezily adopting economic stimulus when needed without concern about the banking system's asset quality, propping up banks with historically high nonperforming loan ratios and fixed-cost pricing, and keeping iron-clad control over the exchange rate. All of these only work when foreign portfolio funds cannot influence asset prices, and when locals have nowhere else to go.

While China's GDP may be 10 times larger than it was in 1995, its external capital controls are still similar to what they were back then. China has opened a few windows at the margin, but it has never seriously opened the doors. If anything, the financial crises of 1997-98 and 2008-09 have taught the authorities to be as slow as possible in making adjustments.

Even if China were to remove external controls, this still leaves the lack of deep domestic markets. Put simply, there's nothing to invest in. You need a local bond market, and China doesn't have one. Relative to its size, China has a much less mature fixed-income market than most of its major emerging-market peers.

On The Street, Phil Streible notes the correlation between rising gold prices and the President’s declining poll numbers:



Bloomberg reports Robert Mundell advocates Serbia fix to the euro in preparation to entering the eurozone.

At Fox Business News, conservative Keynesian Martin Feldstein discounts the President’s economic plan.

The WSJ criticizes US Rep. Barney Frank’s (MA) proposal to reduce Fed independence.

From 1980, candidate Reagan debates President Carter on the economy and inflation.

At COAL, Paul Krugman amplifies his argument that the economy is in a liquidity trap.

Tuesday summary: Domitrovic on Heller's tax cut advice; Papagiansis on growth; Tamny is bearish.

From Forbes, Brian Domitrovic reports that JFK advisor Walter Heller predicted the Reagan tax cuts would pay for themselves.

On NRO, Christopher Papagianis explains the role of slow growth on the federal deficit.

At RCM, John Tamny argues against buying equities in the current environment.

On Fox News, Steve Forbes suggests inflation is killing US jobs:




At Forbes, Ralph Benko sees gold-linked money as part of the current political realignment.

On the BBC, Forbes says England’s Tory government is making a huge mistake by not cutting taxes.

The WSJ regrets US Rep. Paul Ryan’s (WI) decision not to run for president.

A House Member not running for President would usually be among the bottom stories of the day, except the Ryan boomlet reflects the larger discontent with the current Republican field. Among the current crop of candidates, none has managed to articulate free-market principles and policies with Mr. Ryan's fluency or conviction. Neither do they seem to be attempting to appeal to the independent voters who decide elections with an optimistic pro-growth vision.

At NRO, Kevin Williamson suggests Republicans risk losing politically by opposing the payroll tax cut extension.

From Project Syndicate, Martin Feldstein predicts a rise in China’s currency.

On YouTube, Forbes discusses the dollar and tax reform:




From last month, Bruce Bartlett testifies in Congress on tax reform.

In The NYT, Bartlett advocates higher taxes on the wealthy, ignoring Art Laffer’s point that the rich have the most flexibility in how and where they are paid and will simply shelter their income from substantially higher tax rates.

Monday round up: Feldstein advocates a weak dollar; Kadlec sees monetary reform taking shape; Ben Stein blames supply-side economics for deficits.

From The WSJ, conservative Keynesian Martin Feldstein of Harvard argues the weak dollar is helping the US economy.

On Forbes, Charles Kadlec reports the beginning of global monetary reform is taking shape.

Also at Forbes, Ralph Benko sees the political landscape turning back towards free markets.

On CBS News, commentator Ben Stein blames supply-side economics for the deficit. (Ben’s father, Herb, was Nixon’s chief economist when the US left the gold standard.)




At Forbes, John Tamny hammers conservatives for not cutting government more.

On CNBC, John Carney suggests President Obama may have won the larger strategic contest behind the debt ceiling debate.

From Australia’s Brisbane Times, Peter Hartcher suggests the US dollar’s reserve status is responsible for the debt crisis.

In The San Antonio Express-News, T.R. Fehrenbach notes the importance of sound money (h/t: Benko).

Bloomberg reports George Soros predicting a financial crisis that will partially disband the eurozone (h/t: Free Banking):



In The NYT, Harvard’s Greg Mankiw, an advisor to Mitt Romney, defends Ben Bernanke’s monetary record.

On TGSN, Ralph Benko notes Adam Smith’s support for fractional reserve banking.

From COAL, Paul Krugman uses median family income to downplay the Reagan record.

Wednesday summary: Kudlow on the President's tax hike rhetoric; The WSJ opposes cutting tax deductions; The NY Sun on the Sound Money Promotion Act.

From NRO, Larry Kudlow notes the President’s tax hike rhetoric.

The WSJ suggests reducing deductions is a stealth tax increase.

The NY Sun promotes the Sound Money Promotion Act.

On The Kudlow Report, Stephen Moore debates the shift of Independents to the right:



At NRO, Former Sen. Fred Thompson (TN) argues for cutting spending rather than raising taxes.

In The WSJ, Stephen Moore reports Obamacare won’t stop Medicaid and Medicare costs from soaring.

From Project Syndicate, conservative Keynesian Martin Feldstein notes the negative impact of flat wages and rising prices but doesn’t suggest stabilizing the dollar.

In The Washington Post, Financial Crisis Inquiry Commission chairman Phil Angelides chastises Alan Greenspan for his support of financial deregulation, but makes no mention of the weak dollar’s role in the subprime mortgage crisis.

Wednesday round up: Woodhill notes the weak recovery; Feldstein cites obstacles to recovery; The WSJ applauds Pawlenty.

From Forbes, Louis Woodhill contrasts the current recovery with the Reagan Boom and notes the weak dollar as a factor.

In The WSJ, Martin Feldstein argues the President’s proposed tax cuts and incoherent dollar policy, along with deficit, is holding back the economy. For the record, Feldstein has long supported a lower dollar.

The WSJ applauds Tim Pawlenty’s call for higher growth via flatter tax rates and a stable dollar, but is concerned by his support for a balanced budget.

On The Kudlow Report, John Carney discusses J.P. Morgan CEO Jamie Dimon’s critique of federal policy towards the financial industry:




At Forbes, Brink Lindsey notes the difficulty of measuring economic growth.

On Commentary, John Podhoretz rebuts claims that the stimulus spending package was too small.

In The WSJ, Seth Lipsky suggests a constitutional scholar would be a positive addition to the Federal Reserve board.

Back in March, when Chairman Bernanke testified before the House Financial Services Committee, Congressman Ron Paul asked him for his definition of the dollar. Mr. Bernanke made no mention of the Constitution or any law passed by Congress. Instead he replied that his definition of a dollar was what it will buy.

That isn't how the Founders thought about the dollar. They thought about it as a measure of value. They gave Congress the coinage power in the same sentence in which they also gave it the power to fix the standard of weights and measures. When they twice used the word "dollars" in the Constitution, they had something specific in mind—371¼ grains of silver. They made reference not only to silver but to gold.

My guess is that the Founders would agree with Mr. Diamond when he writes that "[w]e need to preserve the independence of the Fed from efforts to politicize monetary policy." This is why they defined money in terms of silver and gold, the latter in particular being the measure of value that is hardest to politicize. Wouldn't it be nice to have among the governors of the Fed someone who thinks about money not in terms of theories but in the constitutional terms in which the Founders thought?

The Washington Times notes that QE2’s end may mean higher interest rates.

At Fox News, Charles Krauthammer explains the economy’s weakness and confirms the 2012 election will center on economic stewardship:




Pew Research reports more Americans blame the deficit on war than on tax cuts or domestic spending.

The NY Sun notes the debt limit debate puts Republicans in an unwinnable political position.

Reuters reports a Chinese official speculating about further dollar weakening.

Thursday items: Woodhill on inflation; Luskin on the rising dollar; Mundell on the euro.

From Forbes, Louis Woodhill provides a satirical look at inflation.

At RCM, John Tamny reviews CJ Maloney’s book on FDR.

On The Kudlow Report, Don Luskin suggests bin Laden’s death has strengthened the dollar:





At Asia Times, David Goldman detects a whiff of deflation.

The WSJ notes silver’s steep decline this week.

At FX Street reports Robert Mundell expects European debt restructuring but that the euro will emerge intact.

From last week at COAL, Paul Krugman argues most of the federal deficit comes from revenue lost in the contraction, as opposed to higher spending:



At NRO, Larry Kudlow wonders if it’s time to withdraw from Afghanistan.

In The NYT, conservative Keynesian Martin Feldstein advocates eliminating tax expenditures while keeping rates the same.

Cato’s Dan Mitchell critiques Feldstein’s argument.

From Think Progress, Matthew Yglesias sees dollar devaluation as good for the economy.

Monday update: The Miller Center features discussion of Jack Kemp; Bloomberg calls for immigration reform; Benko says gold would reduce unemployment.

UVA’s Miller Center of Public Affairs features video of its Jack Kemp Oral History Project.

From The WSJ, Mayor Michael Bloomberg (NY) links immigration reform to economic growth.

Corrections: Page One explains that tax policy does affect economic growth and that growth fixes deficits:




At TGSN, Ralph Benko explains that a gold standard would reduce unemployment.

On Newsweek, Gary Rivlin notes the super rich don’t pay much income taxes and quotes Bruce Bartlett in favor of higher capital gains tax rates.

At COAL, Paul Krugman also argues for higher capital gains tax rates.

On The WSJ, Pulitzer Prize winning editorial writer Joseph Rago suggests seniors aren’t strongly opposed to the Ryan plan for reforming Medicare:



On TNR, progressive Jonathan Cohn criticizes Washington’s focus on deficits over growth.

At The WSJ, Martin Feldstein advocates Social Security private accounts to save the program and improve returns.

Tuesday summary: Economists debate the euro; Domitrovic skewers Romer; Rep. Ryan responds to supply-side critics.

From The WSJ, Barry Eichengreen, Martin Feldstein, Pedro Solbes and Steve Hanke debate the future of the euro.

At Forbes, Brian Domitrovic skewers Christina Romer’s reliance on the Phillips Curve in her recent NYT column on inflation.

On The Kudlow Report, U.S. Rep. Paul Ryan (WI) responds to supply-side critics who say the deficits can be solved by a return to normal long-term economic growth rates:



At Forbes, Charles Kadlec disputes the claim that spending cuts will slow the economy.

In The Washington Times, Richard Rahn critiques New Keynesian economics.

At The Daily Show, Rand Paul shows the weakness of an austerity argument that excludes growth:

The Daily Show - Exclusive - Rand Paul Extended Interview Pt. 1

On RCM, John Tamny argues for corporate tax reform by shifting to a flat tax on gross receipts.

From Alhambra Investments, Joe Calhoun continues to be skeptical about the economy.

In The Freeman, Warren Gibson analyzes gold’s role as money.

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.

Wednesday round up.

At Smart Money, Don Luskin argues quantitative easing won’t help the economy.

On Bloomberg TV, David Malpass discusses gold, but doesn’t correct the moderator’s attempt to adjust the gold price for inflation.

The WSJ asks, Are we in a currency war?



On Asia Times, David Goldman suggests quantative easing is forcing increased savings, but that Obamacare is the big impediment to jobs.

The Atlas Sound Money Project reruns a 2006 Reuven Brenner and Martin Fridson article on why the Fed’s interest-rate targeting is flawed.

Cato’s Dan Mitchell chides liberal Keynesian Paul Krugman and conservative Keynesian Martin Feldstein for suggesting a major war would stimulate the economy.

On The Kudlow Report, David Goldman analyzes stock prices:



The WSJ examines Republican ideas for budget reform.

On RCM, Larry Kudlow sees bullish signs in a GOP takeover of Congress.

Boehner also made it clear that he was unhappy with the 99 Republicans who just voted -- along with most Democrats -- to pass the China trade-and-currency-protection bill. He basically said, "No, we must not go in that direction." And he believes the bill will come to nothing, in particular under Republican leadership.

Boehner understands that such a bill would take a toll on middle- and lower-income people. Indeed, a massive price increase on Chinese imports brought on by protectionist tariffs, or a whopping hike in the value of the Chinese yuan, would slam all the folks who shop at Wal-Mart and Dollar General.

John Boehner himself has a strong free-trade record, and he grasps the need for a stable dollar. When asked about the plunging dollar during the 2000s, and how higher interest rates and inflation subverted the Bush tax cuts, he nodded in agreement. Boehner seems to get it.

Also on Kudlow, Brian Wesbury discusses the GOP agenda:



The Small Business Chronicle offers a good summary of supply-side economics, except for the line about supply-side as a “complement to monetarism.”

Weekend round up.

Larry Kudlow comments on Senate Democrats opposing tax hikes.

Steve Forbes argues the Obama Administration doesn't understand markets.

Minyanville wonders why the euro is rising against the dollar.

Don Luskin debates gold with James Altucher.

Martin Feldstein predicts fiscal austerity will lead to economic contraction, but thinks it's worth it to shrink government.

Keynesian Martin Wolf joins the attack on supply-side economics.

Earlier this year, John Tamny critiqued Wolf.

Is it me or are some Keynesians borderline hysterical about a possible supply-side resurgence in the face of their model's failure?

Tuesday items.

John Tamny explains the wealth gap is part of dynamic growth.

Historian and Econoclasts author Brian Domitrovic critiques the financial reform bill.

It’s funny how easy financial reform could be. Stabilize the dollar, and it’ll be amazing how much money will flow into real enterprises instead of hedging. Cut down taxes and loopholes, and all the focus will be on making and selling, at the expense of strategy, artfulness, and the security of too big to fail. If we’re wondering why so many banks look like zombies today, it’s because the spread of the public sector has made so many lending opportunities unreal.

On The Kudlow Report, Rep. Tom Price discusses his proposal to reduce spending and cut taxes.

The WSJ proposes pro-growth policies rather than extended unemployment benefits.

Nobel Laureate Vernon Smith endorses lower taxes, reduced spending and fewer impediments to small business growth.

Author Niall Ferguson challenges Keynesian logic on deficit spending.

Keynesian Brad DeLong sees error in Ferguson's analysis.

Stanford economist John Taylor suggests lower deficits are stimulative.

In The WSJ, Harvard's Martin Feldstein calls for elimination of credits and subsidies in the tax code (full article here).

Monday update.

Art Laffer thinks future tax increases mean a major downturn in 2011.

Larissa Price quotes classical economist Frédéric Bastiat on why spending stimulus doesn't work.

John Tamny finds it bizarre that in a time of high unemployment, the government penalizes successful companies.

From last week's WSJ, Yale's Ray Fair argues yuan appreciation won't help U.S. employment.

China's watchingamerica.com quotes Robert Mundell in calling for an end to U.S. restrictions on technology sales.

Mundell is still optimistic about the stock market.

At freedomworks.com, Charles Kadlec suggests spending doesn't improve the economy.

In The WSJ, Richard Florida argues home ownership is overrated.

John Tamny has made similar arguments here and here.

Conservative Keynesian and euro opponent Martin Feldstein says he predicted the euro crisis.

Of course, Feldstein was a key influence on the GW Bush Administration's weak dollar policy (see here, here and here), which Robert Mundell thinks caused both the U.S. subprime and euro crises.