From Cato, Alan Reynolds responds to Larry Summers’ call
for more government spending.
At Alhambra Partners, Joe Calhoun sees the dollar bouncing
back and forth between inflation and deflation. For the record, here’s my
column of last year on Robert Mundell’s similar view.
On Forbes, Brian Domitrovic critiques the President for
doing nothing that would improve the economy.
The Daily Callerinterviews Steve Forbes on Mitt Romney’s
record at Bain Capital:
At RCM, John Tamny suggests fear of QE3, not bad
unemployment numbers, is responsible for the market’s decline.
From The Atlas Sound Money Project, Devin Roundtree
argues QE3 is already underway.
At Forbes, Charles Kadlec critiques the President’s economic
policies.
In The WSJ, Robert Barro analyzes the economy’s malaise.
From The Washington Times, Richard Rahn covers efforts to
impose global taxes.
In The WSJ, Roger Lowenstein reviews a book on the
depression of 1837.
Great analysis from our friends at Bretton Woods Research. -----------------
Democrats Worried About Gingrich
As global leaders prepare to meet in Davos, Larry Summers writes in the Washington Post today that increasing demand and certainty should be the top economic priority, particularly because this is the best way to reduce government deficits. In other words, the demand-siders coalescing in Switzerland will be focusing on ways to reignite economic growth.
This shift in focus is the consequence of three things: 1) the failure of the massive Keynesian stimulus bills in 2009, 2) the failure of austerian policy to resolve the European sovereign debt crisis, and 3) most importantly, the U.S. presidential election, which will pit President Obama's demand-side model against a Republican model that is becoming increasingly pro-growth due to the recent surge by Newt Gingrich.
Certainly, the economic model of the U.S. President in 2013 will have a major influence around the world on how to deal with the global malaise. As a result, demand-siders and Democrats, tied to Obama, are fighting for their political lives. Their emerging economic strategy is to emphasize more stimulus or 'shovel-ready projects', and some tax cuts for lower and middle-class Americans while raising taxes on the wealthiest.
Romney has been stumbling in recent weeks because he continues to be identified as a Republican-In-Name-Only (RINO) and refuses to improve his economic plan. At the same time, Gingrich is surging because he has highlighted his hard money position, which is the perfect complement to his across-the-board tax cuts. His call for a Gold Commission was, without a doubt, the primary reason for his come-from-behind victory in South Carolina. If Gingrich sticks with his emphasis on low taxes and hard money, he will win the nomination.
To be sure, the conventional notion that Romney is the biggest threat to Obama is wrong. Gingrich is the biggest threat.
As we think about the political marketplace and debate a few steps in advance, a Gingrich nomination would likely cause demand-siders and Democrats to pursue another strategy because their 'growth plan' wouldn't grow the economy and it will not win over the electorate.
Look for them to attack Gingrich as a budget-balancing austerian. In so doing, they'll be trying to bait Gingrich into explaining how he would cut the deficit and defending why many government programs must be cut. Republican austerianism is usually a major political loser. But given Gingrich's experience in 1995-1996, we expect that he'll keep the focus on growth as the best means to shrink the deficit. Even Larry Summers would agree with that.
At Forbes, William F. Ford and Polina Vlasenko suggest unemployment would be 6.8% without QE1 and 2.
On The Kudlow Report, Stephen Moore debates the impact of spending cuts:
In The WSJ, Stephen Moore reports an item that could explain the market’s nosedive this week: the budget deal may be based on assumptions that the Bush tax cuts lapse, the AMT expands, and new Obamacare taxes kick in, adding $3.5 trillion to the baseline. This will make maintaining lower taxes additionally difficult, on top of the $1.5 trillion of spending cuts already on the table.
At US News, Peter Roff notes on the coming tax battle.
From The Washington Post, Keynesian Larry Summers recommends raising taxes.
In The WSJ, AEI’s Kevin Hassett argues Keynesian stimulus may work for normal recessions but is ineffective after a financial crisis:
Every stimulus effort has not two but three stages. When the stimulus is imposed, there is some positive short-run increase in GDP. When the stimulus is removed, there is an approximately equal and opposite reduction in GDP. But after that, the stimulus must be paid for with higher taxes or ongoing borrowing—causing a further reduction in GDP. Thus the total impact of the Keynesian policy is negative over its life. This fact is visible even in the fine print of Congressional Budget Office analyses so often cited by stimulus apologists, such as its 2009 finding that the Obama stimulus would reduce output in the long run.
At Southern California Public Radio, American Spectator columnist Ben Stein continues to attack tax cuts and supply-side economics, saying there’s no evidence whatsoever that higher tax rates have any impact on the nation’s growth.
In The NYT, Georgetown’s Joseph McMartin suggests Reagan busting the air traffic controllers’ union led to three decades of weak labor.
On COAL, Paul Krugman cites the gold standard's role in the Great Depression.
The Onionspoofs Ben Bernanke (warning: bad language).
From RCM, Louis Woodhill explains why Tim Pawlenty is right about five percent annual growth.
The NY Suncongratulates Pawlenty for his pro-growth message but stresses a deeper emphasis on the dollar.
Conservative Keynesian John Taylor supports Pawlenty’s call for growth.
You can see how the types of pro-growth policies in the Pawlenty plan would work toward the goal by reducing spending growth enough to balance the budget without tax increases and thereby remove threats of a debt crisis; by lowering marginal tax rates to spur hiring and job growth; by scaling back unnecessary new regulations which impede private investment and higher productivity, and by restoring sound monetary policy to remove uncertainty about inflation or another financial crisis.
On Forbes, John Tamny suggests the euro will remain in place.
At Asia Times, David Goldman assesses the “zombie” economy.
On NRO, Don Luskin reports Paul Krugman’s poor record predicting the economy.
From Forbes, David Malpass discusses the debt ceiling, the dollar and the economy.
On International Liberty, Dan Mitchell advocates cutting government to boost growth.
From The Daily Progress, James Philbin suggests a gold standard is key to recovery.
In The Washington Post, Larry Summers opposes reducing demand-side stimulus from the economy.
On Forbes, Richard Salsman blames demand-side economics for the current malaise.
At COAL, Paul Krugman cites Laffer to make the Keynesian case for growth economics.
On International Liberty, Dan Mitchell cites research by Prof. Emmanuel Saez that suggests soccer players change their behavior based on tax rates.
From TGSN, Ralph Benko reports a congressional hearing on rising prices featuring James Grant and Lewis Lehrman.
At The Kudlow Report, Niall Ferguson wonders if Japan’s debt burden can handle reconstruction costs and sees similarities in the US to the 1970s:
From Alhambra Investments, Joe Calhoun critiques commentators who see a stimulus opportunity in Japan’s disaster.
At But What The Hell Do I Know, John Papola scolds Keynesians Larry Summers and Paul Krugman for suggesting disasters and war are stimulative. (H/t: Jerry Bowyer.)
In The WSJ, Francis Fukuyama wonders if China’s rising middle class will revolt against its government.
It is certainly true that the dry tinder of social discontent is just as present in China as in the Middle East. The incident that triggered the Tunisian uprising was the self-immolation of Mohamed Bouazizi, who had his vegetable cart repeatedly confiscated by the authorities and who was slapped and insulted by the police when he went to complain. This issue dogs all regimes that have neither the rule of law nor public accountability: The authorities routinely fail to respect the dignity of ordinary citizens and run roughshod over their rights. There is no culture in which this sort of behavior is not strongly resented.
This is a huge problem throughout China. A recent report from Jiao Tong University found that there were 72 "major" incidents of social unrest in China in 2010, up 20% over the previous year. Most outside observers would argue that this understates the real number of cases by perhaps a couple of orders of magnitude. Such incidents are hard to count because they often occur in rural areas where reporting is strictly controlled by the Chinese authorities.
Also in The Journal, Edward Chancellor reviews a book that argues China’s state banks have papered over large losses.
In The WSJ, Stephen Moore notes a breakdown in Democratic messaging over budget policy.
At Forbes, John Tamny critiques McDonald’s less fatty menu.
Ransquawk.com reports that, “Nobel Economics laureate Robert Mundell says Spain and Portugal need substantial support, adding that QE2 in the US won't cause inflation.”
At Forbes, Steve Forbes notes the absurdity of Ben Bernanke's view that sound money is bad for the economy.
On Fox News, Judy Shelton discusses her new sound money pamphlet:
The Works of Robert A. Mundell website has been upgraded. And here’s the interesting introduction to Monetary Theory.
At The FrumForum, Noah Kristula-Green reports that U.S. Rep. Paul Ryan (WI) favors sound money but not a gold standard.
In The WSJ, John F. Cogan and John B. Taylor suggest federal stimulus was offset by lower state funding:
From The Mises Institute, John P. Cochran advocates a decentralized monetary system.
At NPR’s Diane Rehm Show, Dan Mitchell debates tax cuts. (Hat tip: DM)
On The Kudlow Report, Stephen Moore discusses Larry Summers’s statement that failure to pass the tax bill could cause a double-dip recession:
At The American Spectator, Peter Ferrara inveighs against Obamanomics (presumably pre-tax deal).
In The Washington Post, George Will explains why deficit hawks and social conservatives like U.S. Rep. Mike Pence (IN), but omits that supply-siders like him for advocating sound money.
