Weekend edition: Reynolds, Ferrara and Jenkins on the President's budget and tax proposal; Bell on social issues; Weber on the GOP's message.

Editor's note: Spotty coverage last week and this due to personal travel. Will be back on track later this week.
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From Creators syndicate, Alan Reynolds critiques the President’s budget proposal.

At Forbes, Peter Ferrara suggests the President’s budget will damage the economy.

In The WSJ, Holman Jenkins advises Mitt Romney to take up the President’s challenge on the taxes paid by the wealthy.

The WSJ profiles Jeff Bell who argues social issues are vital to the conservative coalition.

On The Kudlow Report, former US Rep. Vin Weber (MN) discusses the GOP’s messaging problem:



On NRO, Larry Kudlow notes Ways & Means Chairman Dave Camp’s going after Treasury Sec. Tim Geithner on tax policy.

In Reason, Tim Cavanaugh counters Geithner’s tax increase advocacy.

At The American, Aparna Mathur notes the effect of higher taxes on capital flows.

From American Thinker, Ralph Benko advocates a gold commission.

In Forbes, Bill Bonner critiques The NYT’s coverage of a possible return to gold-linked money.

At Monetary Choice, Dave Doctor rebuts Keynesian Dean Baker’s defense of the Federal Reserve.

The NY Sun suggests Sarah Palin would be a better World Bank president than Hillary Clinton.

From Bloomberg, Gregory DL Morris recounts the history of the Federal Reserve’s founding.

From last month’s Texas Public Policy Foundation conclave, Art Laffer debates Keynesian Jared Bernstein:




At The American, James Pethokoukis outlines arguments for the President’s opponents even if the economy is recovering.

In The WSJ, Michael Boskin suggests government is a poor investor.

USA Today links the recession to slow population growth from births and immigration.

Tuesday summary: Benko on Krugman; Tamny on devaluation as default; Kadlec rebuts Blinder.

From Forbes, Ralph Benko notes Paul Krugman’s horror at rising support for gold-linked money.

On RCM, John Tamny explains that the dollar’s devaluation amounts to a defacto default on US debt.

At Forbes, Charles Kadlec challenges Keynesian Alan Blinder’s contention that spending cuts hurt the economy.

On The Kudlow Report, James Pethokoukis discusses the debt debate:




The WSJ reports Senate Democrats’ plan to pile additional tax increases onto the President’s tax proposal.

On NRO, Larry Kudlow argues the public wants deep spending cuts this year.

The American Principles Project runs Jeff Bell’s report on Utah’s Legal Tender Act.

In a Newsweek profile, Sarah Palin discusses her monetary views (h/t: WSJ):

Palin has also become conversant on the subject of quantitative easing, the inflationary effects of which she illustrated with a personal anecdote. “I was ticked off at Todd yesterday,” she said. “He walks into a gas station as we’re driving over from Minnesota. He buys a Slim Jim—we’re always eating that jerky stuff—for $2.69. I said, ‘Todd, those used to be 99 cents, just recently!’ And he says, ‘Man, the dollar’s worth nothing anymore.' A jug of milk and a loaf of bread and a dozen eggs—every time I walk into that grocery store, a couple of pennies more...”

From Asia Times, David Goldman doubts the economy is on the verge of crisis.

The Washington Post reports Democrats are worried about supporting cuts to Medicare.

At The Atlantic, Megan McArdle praises George Soros for knocking the British pound out of the European monetary union in the early 1990s.

Wednesday items.

From Forbes, Brian Domitrovic recalls Robert Lucas’s role in challenging 1970s Keynesianism.

The Hill reprints a Judy Shelton memo to members of Congress on potential questions for Federal Reserve Chairman Ben Bernanke.

On The Kudlow Report, U.S. Rep. Ron Paul (TX) explains why he asked Bernanke to define a dollar:



At The Atlantic, Daniel Indiviglio comments on the Paul/Bernanke exchange.

Cato’s Dan Mitchell notes Bernanke’s embrace of Keynesian spending analysis.

From The WSJ, Mary Anastasia O’Grady notes Fed Chairman Bernanke is “out on a limb” with his inflation prediction:



At RCM, John Tamny defends insider trading.

In The WSJ, Seth Lipsky suggests Sarah Palin’s outreach to labor is similar to Reagan’s.

From the archive, the late-Robert Bartley and Amity Schlaes explain the supply-side revolution.

Monday update.

On Forbes, John Tamny rebuts Paul Krugman’s claim that the world in running out of resources.

The NY Sun notes Sarah Palin’s appreciation for gold and other commodities.

On The Kudlow Report, Art Laffer discusses Illinois’s big tax increase:



At Asia Times, David Goldman says banks are increasing their holdings of Treasuries.

The Financial Times reports prices are rising across the world (hat tip: Jerry Bowyer).

On Bloomberg, Caroline Baum explains Keynesianism’s flaws.

When Obama talks about “growing the economy,” one can see the ghost of John Maynard Keynes rising from the grave. Lord Keynes, who developed the theory without coining the phrase, generally returns at times of economic crisis to advise the current occupant of the White House on how to borrow and spend our way to prosperity. Spending revives the economy, which reduces government transfer payments (unemployment compensation, for example) and raises tax revenues, according to Keynes’s theory.

In other words, the spending pays for itself.

“How marvelous is the Keynesian world!” wrote Henry Hazlitt in “The Failure of the ‘New Economics:’ An Analysis of the Keynesian Fallacies.” “The more you spend the more you save. The more you eat your cake, the more cake you have.”

From Voxeu, Barry Eichengreen examines the future of the dollar.

Rebelyid discusses the successes of supply-side economics.

Weekend round up.

In The WSJ, Art Laffer proposes an agenda for stronger growth but minimizes the centrality of monetary reform.

On Forbes, Econoclasts author Brian Domitrovic exposes the flawed analysis of gold's critics.

Also at The Journal, Stephen Moore discusses the politics of extending the Bush tax cuts:




On Forbes, Paul Hoffmeister suggests the President’s support for quantitative easing may cost him reelection.

At the Economic History Association, Brian Domitrovic reviews a biography of French gold standard advocate Jacques Rueff.

At Cato, Dan Mitchell critiques the deficit commission’s recommendations.

On The Kudlow Report, Don Luskin is bullish after last week’s market selloff:




At New World Economics, Nathan Lewis considers political and economic developments from an international perspective.

On The NY Sun, Seth Lipsky supports Sarah Palin’s sound money advocacy.

At the Atlas Sound Money Project, Tom Duncan reports on a recent panel on the dollar.

Tuesday update.

The WSJ editorial board cheers Sarah Palin and Robert Zoellick for their sound money statements.

At Asia Times, David Goldman endorses Zoellick's analysis.

Adding the dimension of a gold reference point is brilliant. During the late 1980s, we supply-siders promulgated a “Ricardian” gold standard, in which central banks would buy and sell currencies in order to stabilize the gold price in each currency (they wouldn’t have to own a great deal of gold to do this). It is not a gold fractional reserve system, in which claims on the banking system are payable in bullion, but a gold price reference, as Zoellick indicates.

We used to argue that gold was a good long-term indicator of the price level and that a stable gold price portended price stability. That is a naive view I abandoned fifteen years ago. If that were true, then we should have experienced a great deflation as gold fell from $800 at Christmas 1979 to well under $300 an ounce between 2000 and 2002.

Gold, I argued in a 1996 paper for Laffer Associates, should be thought of as a put option on the currency; the opportunity cost of holding gold instead of interest-bearing assets (plus storage costs) are the option premium. If central banks managed their currencies well, gold would trade at its commodity value, that is, around the marginal cost of production, which is now $600 to $700 for the largest mining companies. But if there is a risk that paper currencies will devalue by some extreme margin, it is worth holding gold as a hedge. We cannot price the option using the usual Black-Scholes formula or its variants because we do not know the volatility of a currency over the long term; this is a political matter and inherently uncertain. But if we think that monetary policy is headed to a disaster (QE2 will end up like the Titanic, in short), we will pay more for gold.

On The Kudlow Report, Goldman discusses rising gold and commodities:




At RCM, John Tamny critiques Fed Chairman Bernanke’s QE justification.

In The WSJ, Alan Reynolds critiques the logic of Bernanke’s strategy:

Mr. Bernanke is unconcerned, however, because he believes (contrary to our past experience with stagflation) that inflation is no danger thanks to economic slack (high unemployment). He reasons that if people can nonetheless be persuaded to expect higher inflation, regardless of the slack, that means interest rates will appear even lower in real terms. If that worked as planned, lower real interest rates would supposedly fix our hangover from the last Fed-financed borrowing binge by encouraging more borrowing.

This whole scheme raises nagging questions. Why would domestic investors accept a lower yield on bonds if they expect higher inflation? And why would foreign investors accept a lower yield on U.S. bonds if they expect exchange rate losses on dollar-denominated securities? Why wouldn't intelligent people shift their investments toward commodities or related stocks (such as mining and related machinery) and either shun, or sell short, long-term Treasurys? And if they did that, how could it possibly help the economy?...

There is ample evidence from commodity and foreign-exchange markets that world investors are indeed confident the Fed will raise inflation. However, the growing interest in shorting long-term Treasury bonds shows that the market does not believe higher inflation is consistent with lower long-term interest rates.

In other words, Mr. Bernanke and his FOMC allies are risking higher interest rates and inflated commodity costs in the pursuit of the contradictory objectives of higher inflation and lower bond yields, seemingly oblivious to all the evidence that they are pursuing an impossible dream.

On NRO, Larry Kudlow opposes Fed policy too.