Tuesday summary: Tamny on deflation; Rahn on JP Morgan; Laffer on California.

From Forbes, John Tamny explains deflation.

In The Washington Times, Richard Rahn debunks claims that JP Morgan’s loss proves the need for more financial regulation.

On The Kudlow Report, Art Laffer discusses California’s tax hike plan. California Lt. Gov. Gavin Newsome sound surprisingly supply-side:



At Forbes, Ralph Benko highlights Debacle by Grover Norquist and John Lott, Jr.

From TGSN, Benko suggests Wonder Woman’s lasso is a parable for the gold standard.

On International Liberty, Dan Mitchell parodies a recent Time magazine cover.

At Seeking Alpha, Hale Stewart argues Keynesian stimulus, not supply-side economics, is what the economy needs.

Monday round up: Forbes, Ferrara and Moore review the President's jobs and tax plan; Benko remembers the German Miracle; Volcker warns against inflation.

At CBS News, Steve Forbes critiques the President’s call for higher taxes.

From Forbes, Peter Ferrara proposes an alternative to the Obama jobs plan.

In The WSJ, Stephen Moore suggests the President lacks credibility on the economy.

On The Kudlow Report, Moore debates the Obama/Buffett tax hike proposal:



In The NY Times, former Fed chairman and Obama economic advisor Paul Volcker warns against purposeful creation of inflation.

At Forbes, Nathan Lewis explains how to run a gold standard.

On TGSN, Ralph Benko recounts Ludwig Erhard’s role in the German post-war economic miracle.

From Mercatus, Lawrence White of George Mason supports the Free Competition in Currency Act of 2011.

At Forbes, Rich Miniter suggests Hugo Chavez seized his nation's gold supply in anticipation of adverse court rulings.

At New World Economics, Nathan Lewis examines the balance of payments under gold-linked currency.

In Forbes, John Tamny argues for liberalized immigration laws.

On Kudlow, Larry challenges Scott Paul of the Alliance for American Manufacturing on China trade:

 

At RCM, Larry Kudlow chides NY Mayor Michael Bloomberg for warning of riots if the Obama jobs package isn’t passed.

From Bloomberg, conservative Keynesian John B. Taylor argues for ending the Fed’s dual mandate.

At ritholtz.com, Hale Stewart claims supply-side solutions won’t help the current economy.

Tuesday round up.

In a speech, Federal Reserve Vice Chairman Janet Yellen suggests additional quantitative easing may create new investment bubbles.

On Forbes, John Tamny argues the economy would do fine without the Federal Reserve.

At Zero Hedge, Tyler Durden scolds a former Fed member (currently at the Peterson Institute for International Economics) for recommending the U.S. government sell its gold.

On The Kudlow Report, Larry analyzes the market’s support for looser money:



Investor’s Business Daily reports 56 percent of poll respondents favor keeping all tax cuts in place.

On Jon Stewart (third segment), House GOP Deputy Leader Eric Cantor says Washington has ignored jobs and the economy. Stewart describes the agenda as “freedom and liberty, blah blah blah blah blah.” Cantor suggests Republicans got fired in 2006 because government got too big. No mention of sound money.

At Asia Times, David Goldman doubts Republican electoral gains will help the economy much.

On Forbes, Steve Forbes analyzes Albania’s economic success.

In The Washington Times, Richard Rahn dissects Australia’s winning economic formula.

At CNBC, Keynesian Stephen Roach makes a good point on the dangers of destabilizing China’s financial sector via “a sharp, ridiculously irresponsible increase in the renminbi.” He suggests a more constructive approach is to increase Chinese consumption while increasing U.S. savings and exports:



Last year, Reuven Brenner and David Goldman made a similar argument, built on a formal dollar/yuan link:

Currency policy is the key to opening the world to American exports. What seem like minor errors in Western monetary policy have devastating effects on developing economies. The large industrial economies are like oceangoing vessels designed to withstand typhoons; ten-meter waves may roll them but will not sink them. Not so for the fragile craft in their wake. As former Federal Reserve chairman Paul Volcker once observed, the industrial nations' deep financial markets allow participants to hedge against large shifts in currency parities. Not so for the shallow, inefficient financial markets of developing nations, in which the vast majority of firms do not qualify as derivative counterparties, and the yield curve is not liquid past the two-year mark….

China, in particular, is the natural fulcrum for America's proper economic policy. China's requirements for infrastructure and capital equipment are enormous: Two-thirds of its 1.3 billion people still live in conditions of extreme backwardness. But rather than invest in its own interior, China has diverted its savings to securities in Western currencies as a rainy-day hedge against potential political and economic disruption. America should help China stabilize its currency by a solemn and formal agreement to link the renminbi to the dollar; China in turn should make its currency convertible and open its capital market to American institutions. Other countries may wish to participate in this arrangement; with the world's two largest and most dynamic economies as an anchor, a Sino-American currency agreement would quickly become the point of orientation for the rest of Asia and eventually for other countries.

China's demand for savings, to be sure, stems in part from the one-child policy, which requires Chinese to provide for their retirement with financial assets rather than offspring. But a good deal of Chinese savings is precautionary. With a nonconvertible currency and limited outlets for investment, Chinese are apt to exaggerate their rainy-day savings.

In effect, China needs to reduce its saving rate drastically while America increases hers. Why wouldn't just letting China's currency be convertible on its own, without coordinating with the United States, be part of the solution, as some propose?

The simple answer is that China's capital markets--and, by extension, its political system--are still too fragile to withstand the tsunami-sized capital flows caused by the dollar's instability. Dollar devaluation sends capital rushing into China, distorting asset prices. By contrast, a repetition of the global liquidity crisis that followed last year's failure of Lehman Brothers could provoke massive capital flows out of China, in a repeat of the 1997 Asian crisis. As long as the United States subjects its currency to extreme volatility, China cannot take the risk of making its own currency convertible.

The WSJ editorializes in support of immigration visas for entrepreneurs.

Hawaiian Libertarian offers a good list of historical quotations on the evil of fiat currency.

Friday update.

Bretton Woods Research argues Republicans have lost political ground by focusing on deficits rather than growth.

At Asia Times, David Goldman believes rising CPI doesn't discount deflation fears.

On The Kudlow Report, Stephen Moore debates the Bush tax cuts.

In The WSJ, Michael Darda suggests tax reform will improve the economy.

H.C. Wainwright's David Ranson analyzes tax revenue and debt.

John Tamny discusses the economy on the John Batchelor radio show.

The Heritage Foundation reports on the effect of tax increases.

The WSJ editorial page remembers Dan Rostenkowski's work on tax reform.

Jon Stewart mocks Republicans for saying they care about deficits but won’t raise taxes.