Wednesday items: Newt proposes gold commission; Domitrovic on Romney at Bain; Jenkins on the financial meltdown.

Big news: The Weekly Standard reports Newt Gingrich advocates a gold commission:



The WSJ argues Mitt Romney should use news of his 15% tax rate to argue for fundamental tax reform.

At Forbes, Brian Domitrovic explains the economic context of Romney’s work at Bain Capital.

On The Kudlow Report, James Pethokoukis discusses Gingrich’s rise in the polls:



At RCM, John Tamny suggests Ben Bernanke was right in 2006 for wanting the Federal Reserve to let the mortgage market unwind.

In The WSJ, Holman Jenkins examines the causes of the 2008-09 financial meltdown, but omits Robert Mundell’s claim that the rapid 30% dollar appreciation in summer 2008 was the central factor.

On The Daily Beast, David Frum defends the 15% capital gains rate.

Futureofcapitalism rebuts The NYT on the capital gains tax rate.

On The Mike Rosen Show, Cato’s Alan Reynolds critiques Ronald McKinnon’s call for a wealth tax.



At IBD, Walter Williams notes the inequality of wealth creation as opposed to income.

From Fox News, David Pietrusza cites Calvin Coolidge on marginal tax rates:

If we had a tax whereby on the first working day the Government took 5 per cent of your wages, on the second day 10 per cent, on the third day 20 per cent, on the fourth day 30 per cent, on the fifth day 50 per cent, and on the sixth day 60 per cent, how many of you would continue to work on the last two days of the week?

From Alhambra Partner, Joe Calhoun worries at bullish sentiments.

At TGSN, Ralph Benko argues mismanagement of the gold standard led to the Great Depression.

On NRO, Jim Manzi considers how to cut marginal tax rates on the poor.

In The WSJ, actor Rick Moranis satirizes modern economic theories.

Monday items: Yahoo on the rising dollar; Woodhill on the employment report; The WSJ on Santorum.

Yahoo! Finance reports the euro’s dollar price has fallen from $1.48 in May to $1.27 today.

At RCM, Louis Woodhill disputes Friday’s positive employment report.

The WSJ critiques Rick Santorum’s economic plan.

On The Kudlow Report, Steve Forbes discusses Jon Huntsman’s late surge in New Hampshire:



At Forbes, John Tamny suggests the ongoing recession is incompatible with the American identity.

On Forbes, Ralph Benko reports new political initiatives to shake up the status quo.

In The WSJ, Maurice Greenberg argues for a free trade pact with China.

On RCM, Brian Wesbury skewers recent economic legislation.

At The WSJ, Mary Kissel discusses Mitt Romney’s Bain Capital years:




In The WSJ, Ronald McKinnon makes the conservative case for a wealth tax:

In order to have a fairer tax system, we should implement a new federal wealth tax in addition to the federal income tax. Unlike the current income tax, the wealth tax would not rely on how income is defined. Rather, it would require that households list all their domestic and foreign assets on, say, Dec. 31 in the relevant tax year. With a large exemption of $3 million that effectively excludes more than 95% of the population, a moderate flat tax—say 3%, on wealth so defined—could then be imposed.

On TGSN, Ralph Benko explains Winston Churchill’s error in re-establishing the British gold standard.

Also at TGSN, Benko quotes a very smart monetary analysis from Charlie Chaplin.

Weekend update: Lewis and Moore on the flat tax; McKinnon, Weisenthal and Bowyeron interest rates; Woodhill on sound money and America's enemies.

From Forbes, Nathan Lewis notes the success of flat tax reforms around the world.

In The WSJ, Ronald McKinnon suggests the Fed’s loose money policies have blocked bond market vigilantes bidding up interest on the debt.

At Business Insider, Joe Weisenthal counters McKinnon, noting that bond rates rise and fall with economic growth. (H/t: Vlad Signorelli.)

From Forbes, Jerry Bowyer argues interest rates are unreliable indicators but gold suggests inflation.

On The Kudlow Report, Stephen Moore debates the flat tax:


On NRO, Larry Kudlow sees Gov. Chris Christie (NJ) as the antidote to the President’s demoralizing message.

In The WSJ, Stephen Moore argues the President’s tax fairness arguments bolster the case for a flat tax.

The NY Sun suggests US Rep. Ron Paul (TX) would be a strong running mate for Gov. Mitt Romney (MA).

At Asia Times, Reuven Brenner critiques Keynesian economics.

In Forbes, Louis Woodhill suggests a sound dollar would undermine America’s adversaries.

Columnist George Will bashes US Rep. Barney Frank’s proposal to strip regional bank presidents of their Federal Open Market Committee voting rights.

TSGN’s Ralph Benko discusses the gold standard on the Larry Parks radio show.

At CNBC, Jeff Bell argues embrace of sound money will help the GOP presidential candidates (h/t: TGSN).

In The NYT, C. Fred Bergsten of the Peterson Institute for International Economics claims a weaker dollar will lower US unemployment.

From the archive, Jude Wanniski discusses Bergsten’s background.

Thursday items: The WSJ reports the dollar's rise; Woodhill on the auto industry; Pento sees gold emerging as the world reserve asset.

The WSJ reports the dollar is beginning to rise.

At Forbes, Louis Woodhill explains how regulation and dollar volatility has hurt US automakers.

In The WSJ, Sen. Rob Portman (OH) advocates dollar-for-dollar deficit reduction for every debt ceiling increase. 

On The Kudlow Report, David Malpass discusses Italy’s possible default and its effect on world markets:




At Forbes, Bill Frezza discusses the end of Bretton Woods with George Shultz.

From the archive, Jude Wanniski explains why Nixon left gold.

On Forbes, Michael Pento suggests the current crisis calls for a return to gold as the international reserve currency.

In The WSJ, Charles C. Johnson notes President Coolidge beat recession with tax and spending cuts.

But "nothing" seemed to work. With the tax cuts in place, luxuries of the rich quickly became middle-class, as affordable cars and radios rolled off the assembly line. Industrial titans (and Coolidge-backers) like Harvey Firestone and Henry Ford made unheard-of fortunes. Real annual per-capita income rose 37%, to $716 from $522.

The "Coolidge prosperity," denounced as ephemeral after the 1929 crash, was real for those who experienced it. Coolidge knew this well, telling reporters that "If you can base the economic conditions of the people on their appearance, the way they are dressed, [and] the general appearance of prosperity, I should say it was very good . . . I noticed most of the ladies had on silk dresses and I thought I saw a rather general display of silk stockings."

On RCM, John Tamny reviews Bryan Caplan’s Selfish Reasons to Have More Kids.

In IBD, Mark McKinnon reports the President’s allies hope to spur a third party challenge from Ron Paul in order to split anti-Obama votes.

At The Atlantic, Keynesian Jared Bernstein blames supply-side economics and laissez-faire policies for recent economic troubles but omits the dollar from his analysis.

Tuesday round up: Steil and Hinds on the dollar; Domitrovic on the IMF; McKinnon sees stagflation.

From The Financial Times, Benn Steil and Manuel Hinds explain that the dollar’s reserve status is bad for the world and for the U.S.

At Forbes, Brian Domitrovic suggests the IMF has little purpose without fixed exchange rates.

In The WSJ, Stanford’s Ronald McKinnon sees stagflation in the economy.

Not having an exchange-rate constraint, the Fed can conduct a more independent monetary policy than other central banks can. How it chooses to exercise this independence is crucial to the stability of the international monetary system as a whole. For more than two years, the Fed has chosen to keep short-term interest rates on dollar assets close to zero and—over the past year—applied downward pressure on long rates through the so-called quantitative easing measures to increase purchases of Treasury bonds. The result has been a flood of hot money (i.e., volatile financial flows that are subject to reversals) from the New York financial markets into emerging markets on the dollar's periphery—particularly in Asia and Latin America, where natural rates of interest are much higher.

Wanting to avoid sharp appreciations of their currencies and losses in international competitiveness, many Asian and Latin American central banks intervened to buy dollars with domestic base monies and lost monetary control. This caused a surge in consumer price index (CPI) inflation of more than 5% in major emerging markets such as China, Brazil and Indonesia, with the dollar prices of primary commodities rising more than 40% world-wide over the past year. So the proximate cause of the rise in U.S. prices is inflation in emerging markets, but its true origin is in Washington.

In India’s Free Press Journal, S.S. Tarapore discusses the gold standard and that nation’s economy.

In The Washington Times, Richard Rahn reports on a destructive banking regulation that would require U.S. banks to report the names of foreign account holders to their home governments.

From Alhambra Investments, Joe Calhoun suggests Fed Chairman Bernanke has turned the U.S. into a nation of speculators – again.

At CNBC, supply-side foe Peter Peterson talks about the need for higher taxes to fight the debt, but doesn’t mention growth:

Bloomberg notes Grover Norquist’s clout in opposing tax increases as part of a budget deal.

The Washington Post reports Paul Volcker saying that we need tax reforms that raise more than 19 percent of GDP.

Cato’s Steve Hanke challenges Keynesian claims about deficits and growth.

The Washington Post explains how Chinese manufacturers evade U.S. tariffs.

On Forbes, Ralph Benko sees politics behind a recent IRS rules change to tax donations to 501(c)(4) organizations.

Chris Powell of GATA comments on our WSJ article on Mundell.

At Asia Times, David Goldman disagrees with some elements of Mundell’s analysis.

The National Foundation For American Policy reports that children of immigrants drive U.S. achievements in science and math.

In The NYT, Bruce Bartlett critiques the Fair Tax.

Tuesday summary.

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 WSJ editorializes 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.

Friday items.

At Globe Asia, Steve Hanke calculates President Obama’s misery rating (third after Carter and Nixon). One note is that Hanke refers to Fed rate policy as responsible for the last decade’s falling dollar; analysts including John Tamny argue Treasury jawboning was more responsible as the dollar declined in the 2000s when rates were falling and when rates were rising.

On The Kudlow Report, James Glassman debates Fed policy’s impact on markets:



In The WSJ, Stanford’s Ronald McKinnon counters the recent editorial on China’s monetary sterilization and suggests rising wages will improve trade imbalances.

At Bloomberg TV, David Malpass argues a yuan revaluation would hurt China and the U.S.

From the Heritage Foundation, Derek Scissors discounts security concerns stemming from China trade.

On Kudlow, Larry Kudlow analyzes the GOP’s Pledge to America:



At Reason, Veronique de Rugy argues spending cuts won’t hurt the economy.

From the Mercatus Center, Matthew Mitchell and Jakina Debnam suggest government deficits crowd out private sector investment.

At The Weekly Standard, Jonathan V. Last notes the low American birth rate.

Tuesday round up.

Stanford's Ronald McKinnon defends China on the yuan.

Historian and Econoclasts author Brian Domitrovic debunks What's the Matter with Kansas?

Louis Woodhill predicts a double dip recession.

John Tamny suggests New York defaulting on its debt wouldn't be bad.

Brian Wesbury analyzes the June employment report.

Don Boudreaux rebuts the claim that manufacturing is declining.

David Brooks thinks demand side economics is washed up.

Paul Krugman disagrees.

Progressive Michael Lind argues the American people want more spending.

Monday update.

Prof. Robert Mundell analyzes China’s economy.

And how about currencies? For Nobel-prize winner Robert Mundell, prosperity in a country like China relies more on developing internal demand.

Robert A. Mundell, Nobel Prize Winner in Economics, said, "I think it's not a movement of the exchange rate, what they need to do is to move into more spending, increase pensions for the ageing, for example."

Larry Kudlow explains that business, not government, creates jobs and wealth.

Don Luskin sees a positive turnaround for Europe.

Robert Mundell made this prediction weeks ago.

WSJ columnist David Reilly quotes Ronald McKinnon and David Malpass in arguing money is too cheap.

John Tamny discusses deflation on the John Batchelor radio show (at about 20 minutes).

In The WSJ, Stephen Fidler reports on Finland's flexible payroll tax.

Wayne Jett is dissatisfied with the financial reform bill.

Paul Krugman chastizes Republicans for blocking unemployment benefits.