From Globe Asia, Steve Hanke makes the important point
that despite generally loose government monetary policy, private sector
monetary creation is tight (and accounts for 85% of total money supply),
perhaps explaining how commodity inflation can coexist with deflationary
headwinds.
At The Financial Post, Terry Corcoran cites Hanke’s
analysis to critique the series of non-productive international summits.
NPR's Marketplace quotes Hanke in assessing Ben Bernanke’s policies.
On Fox News, Steve Forbes calls the idea of raising taxes
in the current climate preposterous:
At Forbes, Louis Woodhill cites Jude Wanniski’s political
model explain the Greek election’s outcome.
From earlier this month in The WSJ, James Grant reviews two books
defending capitalism but notes their lack of focus on the need for monetary
reform.
The WSJpans Bernanke’s extension of Operation Twist.
From First Trust, Brian Wesbury highlights the Fed’s
non-committal policy.
In The WSJ, Dan Henninger contrasts the presidential
candidates economic messages.
On AEI, James Pethokoukis reports Michael Darda’s view on
NGDP targeting.
In The WSJ, Matthew Slaughter argues the Employ American
Workers Act has weakened the economy.
At PJ Media, David Goldman analyzes Saudi Arabia’s role
in propping up Egypt’s military against the Muslim Brotherhood.
Note: Sorry to miss yesterday. Was hit by a 24-hour flu. ------------------------
In The WSJ, Judy Shelton explains that devaluation is the wrong way to promote exports. (Full text here from The Atlas Sound Money Project.)
On Forbes, Charles Kadlec makes a strong case that pushing China to raise the yuan will only increase that nation’s financial power.
At The Kudlow Report, Larry analyzes the President’s plan for taxes and spending:
Also on Forbes, Brian Domitrovic explains the folly of government investment projects.
Seeking Alpha quotes David Malpass on the State of the Union speech.
At NRO, Larry Kudlow touts Gov. Chris Christie’s (NJ) desire for deeper spending and entitlement cuts.
The WSJeditorializes that poor federal monetary and spending policy misallocates scarce resources and damages the productive economy:
The third way [to encourage economic growth] is through the more efficient use of capital, both human and monetary. These resources are scarce in any economy, and growth will be fastest if they are allowed to find their highest return. If resources are allocated to less productive uses or create asset bubbles due to bad policy, then overall growth will be slower than it should be.
In our view, this third point has been the largest but least appreciated problem in the U.S. economy in recent years. First the Federal Reserve's subsidy for credit and other policies pushed resources into the financial industry, and especially into real estate. When that bubble burst, triggering the 2008 financial panic and recession, the U.S. responded over two years with a huge expansion of the federal government.
Both periods were marked by the misallocation of trillions of dollars into wasted investments. One reason the current recovery has been so lackluster is that it takes time for an economy to retool from these mistakes. Money that went to build now-empty condos on the Vegas Strip—or to government transfer payments—can't be reclaimed to rebuild American manufacturing and technology.
On Financial Sense, Michael Kosares recounts the rising support for a gold-backed dollar.
Naples News reports on Steve Forbes’ three ingredients for economic growth.
At The Washington Times, Cato's Richard Rahn challenges the President to enact serious regulatory reform.
In The Journal, Dartmouth’s Matthew Slaughter highlights the benefits of comparative advantage in world trade.
On Rayedio Lounge, Wayne Jett discusses China’s role in the world economy.
Tonight’s big news is that the President and congressional Republicans have agreed to a plan that extends all Bush tax rates for two years, cuts payroll taxes, expands business deductions, and prevents reversion of the estate tax to the previous level.
This accord – a significant capitulation by the President – plus the new Korea free trade agreement, amounts to a significant pair of supply-side policy victories. For the first time in 18 months, I think President Obama might have a shot at re-election.
The x factor will be the dollar. If the dollar continues to fluctuate against the euro and gold, a strong recovery will undermined, damaging the President’s prospects.
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On 60 Minutes, Fed Chairman Ben Bernanke recommits to lowering interest rates to raise employment, but denies he is increasing the money supply. He says the Fed can reverse course and tighten money in “15 minutes” if inflation arises.
On a side note, Scott Pelley’s narrative, bolstered by Bernanke, is completely stuck in the Phillips Curve framework – growth causes inflation, recession causes deflation. And, in recounting the Fed’s extraordinary 2008 measures to stop the financial meltdown, Bernanke and Pelley overlook the Fed’s policy errors that led to the subprime bust and liquidity crisis.
At Economics21, David Malpass critiques Bernanke’s analysis.
On The Kudlow Report, Kudlow is enthusiastic about the tax agreement:
On Forbes, John Tamny makes the crucial point that fixing the dollar’s price – not general price stability – is key to repairing the economy.
Also in The Journal, Robert M. Kimmitt and Matthew J. Slaughter support multinationals insourcing to the U.S.:
To boost the hiring prospects of insourcing companies (and of many others as well), policy makers should focus on three issues quite distinct from macroeconomic tools like quantitative easing and federal stimulus spending.
First, taxes. Insourcing CFOs reported to the Organization for International Investment that taxation is the single most important policy area that shapes their companies' investment decisions. In turn, their top concern is the U.S. corporate tax rate, which, at 35%, is one of the world's highest.
America's high corporate tax rate inhibits hiring and investment in all U.S. firms, big and small alike. All the recent proposals by prominent deficit-reduction panels have recommended cutting the statutory rate and simplifying the corporate tax code. Policy makers should act on these proposals as quickly as possible to reduce the uncertainty that is inhibiting businesses' hiring and investment.
Second, trade. The global production and distribution networks of insourcing companies foster lots of exports and related jobs. So does trade liberalization. The more U.S. policy makers enact free-trade agreements with other nations, the more insourcing companies will be able to expand their exports and related jobs. Insourcing companies owned by South Korean parents exported $10.5 billion in goods in 2008; this would likely grow if America could ratify the pending free trade agreement with South Korea.
Third, tone. A worrisome 72.2% of insourcing CFOs say that the environment for doing business in America deteriorated over the last year. Contributing to this deterioration were the "Buy American" provisions of the 2009 American Recovery and Reinvestment Act. This protectionist tone belies the reality that America today is in a new era of global competition to attract the dynamic operations of global companies.
On CTV, Reuven Brenner defends gold-backed currency.
Last week in The WSJ, Gerald O’Driscoll wonders why we have a central bank (reprinted at the Atlas Sound Money Project).
From the BBC, Han Rosling illustrates the great progress in global health and wealth since 1810 (hat tip: Cafe Hayek):
On his blog, Dan Mitchell answers the claim that supply-side economics, specifically low tax rates, blew up Ireland’s economy.
