From Forbes, Charles Kadlec sees tightening money
slowing growth. At NRO, Larry Kudlow suggests the dollar’s rise against
the euro is creating deflationary headwinds for the economy.
On Fox Business, Lew Lehrman notes the dollar tightening
since the end of QE2 (h/t: TGSN):
At Forbes, Louis Woodhill challenges the economic
philosophy behind President Obama’s view of government-created jobs.
The Heritage Foundation charts relative growth rates of
the private sector versus local, state and federal government.
At City Journal, Art Laffer argues for tax reform in
California.
In The WSJ, Edward Lazear argues the President can’t
blame his predecessor for the weak economy.
At C-SPAN, Bill Kristol suggests Republicans would be
better off without Ron Paul, but says he is “mildly pro gold standard” (h/t: Free
Banking):
On International Liberty, Dan Mitchell chides Jeb Bush
and Lindsey Graham for putting tax hikes on the table.
Reader Supported News reports Bernie Sander’s release of
Fed bailouts.
In The WSJ, Stephen Moore notes continued sugar
subsidies.
From Forbes, Nathan Lewis explains the simplicity of gold-linked money.
On RCM, Bill Frezza argues supply-side critics are wrong to oppose sound money.
The NY Sunhighlights the decline in confidence in the Federal Reserve even as it becomes more transparent.
On The Kudlow Report, Home Depot Bernie Marcus debates the free enterprise system:
In Forbes, John Tamny critiques a TV show’s bad economics about China and US treasuries. From FT/Alphaville, Izabella Kaminska notes the world’s move to gold as safe collateral. In The Weekly Standard, Bill Kristol predicts Mitt Romney will win the presidency if he focuses on issues. At The WSJ, Bill McGurn blames the tax code for a significant increase in US expatriates renouncing their citizenship.
In The WSJ, Stephen Moore reports on Orrin Hatch’s (UT) Tea party primary opponent.
From The Spectator (UK), Fraser Nelson highlights Sweden’s tax cutting success.
On Forbes, Charles Kadlec reviews Art Laffer’s new book on state tax competitiveness. In The WSJ, Mary Anastasia O’Grady explains how Ben Bernanke’s low dollar is damaging Brazilian exporters and creating political pressures for its government. At The WSJ, O’Grady discusses the Fed’s fear of incipient inflation:
At Forbes, Ralph Benko suggests obedience to authority helps explain Washington’s aversion to the gold standard. The WSJreports China widening the yuan’s trading range. From TWS, Bill Kristol rebuts the suggestion that President Reagan favored tax hikes on the rich. At Forbes, Brian Wesbury argues spending cuts are required to save America from a VAT. On The Kudlow Report, Larry debates the Buffett Tax vote with Jared Bernstein:
At Forbes, John Tamny critiques lotteries for funding larger government. In The NYT, Greg Mankiw suggests competition is good for governments too.
The WSJnotes Newt Gingrich’s rise, compliments his citation of Ron Paul’s hard money mantra, and urges Mitt Romney to take a bolder tax reform stance.
The NY Sunapplauds Gingrich’s naming Lewis Lehrman and James Grant to his Gold Commission.
In The Weekly Standard, Bill Kristol praises the Gold Commission.
On The WSJ, Kim Strassell discusses Romney’s tax return and Gingrich’s Freddie Mac contract:
In The WSJ, Stephen Moore notes voter enthusiasm for Gingrich. The Right Scoop cites radio host Mark Levin challenging Gingrich on the creation of supply-side economics. Levin says, incorrectly, that Reagan ran on supply-side economics in 1974. In fact, according to Bob Novak's memoir, The Prince of Darkness: 50 Years Reporting in Washington, Reagan was converted to supply-side economics (tight money, marginal tax rate cuts) at a private meeting with Jack Kemp in early 1979. At RCM, John Tamny notes the stock market’s weakness versus gold.
In The Washington Post, James Grant examines the economy’s quick recovery, despite government austerity, from the recession of 1920-21. In The NYT, Romney advisor Greg Mankiw offers four principles for tax reform. At Globe Asia, Steve Hanke proposes a non-military solution to disputed territory.
And on The Alyona Show, Ralph Benko discusses Nixon’s decision:
From Cato, Dan Griswold notes the Nixon Shock anniversary but praises the floating dollar:
Closing the gold window was arguably inevitable given the lack of monetary discipline by the U.S. central bank. By 1976, the dollar and other major currencies were floating freely, which has turned out to work rather well, as Milton Friedman predicted it would. It also turned out that pressure on the dollar to depreciate was not driven by speculators after all but by the surplus of dollars that had been created to finance the Vietnam War and the Great Society.
ABC reports Gov. Rick Perry (TX) suggesting more Fed easing would be treasonous.
On NRO, Larry Kudlow praises the substance of Perry’s remark.
At Reuters, Jim Pethokoukis contrasts Perry’s Fed comments with past comments by Gov. Mitt Romney (MA).
On The Kudlow Report, US Rep. Ron Paul (TX) discusses gold and Perry’s Fed comments:
At NRO, Katrina Trinko notes Romney’s shift towards a flat tax.
From The WSJ, Stephen Moore wonders if the GOP remembers Jack Kemp’s pro-growth message.
Future of Capitalism compiles responses to Warren Buffett’s tax increase advocacy.
IBD also weighs in. As does NRO’s Michael G. Franc.
On Fox Business News, Steve Forbes discusses returning to the gold standard:
At RCM, John Tamny warns against banning short sales.
On CNBC, John Carney suggests the political parties may be conspiring to kill Jude Wanniski’s two Santa Clauses.
At Bloomberg, NRO editor Ramesh Ponnuru advocates more loose money.
Also on Kudlow, a panel discusses Perry’s Fed remarks:
On NRO, US Rep. Thad McCotter (MI) describes America facing a Great Deflation but chastises the Fed for inflationary quantitative easing.
At The NYT, Bruce Bartlett argues the economy needs Keynesian demand-side stimulus.
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 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.
At Forbes, Jerry Bowyer highlights China’s weaknesses.
On Cafe Hayek, Don Boudreaux rebuts China currency manipulation charges.
The XtraNormal bears argue China manipulates its currency which steals American jobs.
The WSJclarifies that China has many problems and that a burst of Reaganite growth would restore American confidence.
China remains an underdeveloped country, its economy barely one-third the size of America's. Its leaders live in fear of peasant revolts, ethnic separatists, underground religious movements, political dissidents and the free flow of information. Its economy remains profoundly hobbled by corruption, inefficient state-owned enterprises and an immature banking system.
There is no genuine rule of law and its regulatory environment has become increasingly unpredictable for foreign investors and local entrepreneurs. It suffers from an aging population and environmental damage Americans wouldn't tolerate. Its greatest comparative advantage—cheap labor—is under strain from rising domestic wages and competition from places like Vietnam and Bangladesh.
Above all, China suffers from an absence of self-correcting mechanisms, beginning at the top with its authoritarian political system. And while it can trumpet achievements like a stealth fighter or bullet trains—some based on pilfered designs—it has a harder time adjusting to failure, much less admitting to it.
From Foreign Policy, Daniel W. Drezner explains that China isn’t beating the U.S.
On The Kudlow Report, Gov. Mitch Daniels (IN) shows sound policy instincts regarding China and pro-growth policies, but omits the dollar from his analysis:
At Conscience of a Liberal, Paul Krugman praises the Bush era’s dollar decline.
On his blog, Brad DeLong quotes Krugman citing Milton Friedman in favor of currency devaluation.
In The WSJ, Joseph Sternberg suggests China won’t "rebalance" toward consumption anytime soon.
China needs to reallocate capital and labor on a massive scale to orient itself toward producing goods and services that Chinese consumers want to consume. This will require major banking changes, especially improving access to credit for the small and medium-sized enterprises that make a modern consumption-driven economy tick. Both regulation and habit will get in the way.
The regulation involves interest rates: Government manages both deposit and lending rates in a way that guarantees banks a wide spread. This was intended to help banks earn themselves out of an earlier generation of nonperforming loans at the expense of households, which earn lower rates on savings deposits. And the policy could prove especially necessary if 2009's credit binge results in huge piles of bad debts.
On Lew Rockwell, "Norm" claims Bill Kristol’s recent support for monetary reform is “another neocon trick, like supply-side economics.”
MarketWatch reports on Nobel laureate Robert Mundell’s speech today. From The Jakarta Post, more here.
At The Weekly Standard, Bill Kristol aligns with calls for monetary reform.
In The WSJ, Ronald McKinnon explains that weak dollar periods destabilize the world.
So what lessons can we draw from these episodes of U.S. easy money and a weak dollar for the stability of the American economy itself?
First, sharp general price increases in auction-market goods such as primary commodities or foreign exchange (i.e., a weakening dollar) is an early warning sign that the Fed is being too easy—a warning that the Fed is again ignoring as we enter 2011.
Second, beyond the rise in primary commodity prices, general price inflation in the U.S. only comes with long and variable lags. After the U.S. monetary shock, hot money flows into countries on the dollar standard's periphery cause a loss of monetary control and general inflation to show up there more quickly than in the U.S.
In 2010, consumer price indexes shot up more than 5% in major emerging markets such as China, Brazil and Indonesia, while the consumer price index in the U.S. itself rose only 1.2%. Similarly, after the Nixon shock of 1971, there was much more explosive inflation in Japan in 1972-73 than in the U.S. But by December 1979, inflation in America's producer and consumer price indexes was more than 13%.
At RCM, Louis Woodhill argues that the European Central Bank, not deficit nations such as Greece, will determine the euro’s success.
In The Journal, President Obama outlines his new executive order to reduce anti-competitive regulations.
At The Kudlow Report, Larry discusses the President’s move:
The WSJeditorializes that if China wants to be treated like a major power it needs to behave accordingly.
Also at The Journal, Aaron Friedberg sees China flexing its muscles because it perceives the U.S. as in decline.
In The NYT, Harvard’s Mark Wu argues China’s exchange rate has far less impact than yuan revaluationists claim.
These claims, however, are more wishful thinking than actual truths. Consider the first idea, that a strengthened Chinese currency would increase the growth rate of American exports to China. From 2005 to 2008, the renminbi appreciated nearly 20 percent against the dollar. Yet, American exports to China over those three years grew at a slightly slower pace than in the previous three-year period when the renminbi did not appreciate at all (71 percent versus 89 percent)....
Second, I recently did an analysis of the top American exports to our 20 leading foreign markets, and found little evidence that an undervalued Chinese currency hurts American exports to third countries. This is mostly because there is little head-to-head competition between America and China. In less than 15 percent of top export products — for example, network routers and solar panels — are American and Chinese corporations competing directly against one another. By and large, we are going after entirely different product markets; we market things like airplanes and pharmaceuticals while China sells electronics and textiles.
Finally, it is unlikely that a stronger renminbi would bring many jobs back home. Instead, companies would most likely shift labor-intensive production to Vietnam, Indonesia and other low-wage countries. And in any case many high-skilled jobs will continue to flow overseas, as long as cheaper talent can be found in India and elsewhere. Only in a few industries, like biomedical devices, would a stronger Chinese currency combined with quality issues tempt American companies to keep more manufacturing at home.
At NRO, Larry Kudlow suggests the best way for the U.S. to respond to China is with strong economic growth.
In The WSJ, Stephen Moore reports on the Mike Pence for President movement.
