Weekend edition: Ferrara on unemployment; Jolis on Sweden; Mundell in China.

From Forbes, Peter Ferrara argues the true unemployment rate is 11%.

In The WSJ, Anne Jolis notes the success of Sweden’s tax cuts and labor reforms.

On The Kudlow Report, Don Luskin discusses the G-8 Summit:



China Daily reports Robert Mundell discussing the complementarity of Taiwan and Fujian.

On Bloomberg, Caroline Baum challenges Paul Krugman on the debt.

From Financial Sense, Steve Forbes advocates free markets and gold.

At The WSJ, Stephen Moore highlights Nebraska’s GOP primary for the US Senate.

Thursday update: Woodhill on growth vs. fairness; Rickards on gold and the IMF; Kudlow on Geithner and Bernanke.

From Forbes, Louis Woodhill argues for economic growth rather than fairness.

In US News, Currency Wars author James Rickards explains the hidden role of gold at the IMF.

From The WSJ, George Melloan highlights US Rep. Kevin Brady’s Sound Dollar Act.

On CNBC, Larry Kudlow critiques Tim Geithner’s political rhetoric and Ben Bernanke's refusal to raise inflation:



In The WSJ, Cato’s Dan Mitchell applauds Switzerland’s fiscal restraint law.

From Bloomberg, Caroline Baum examines the 2013 fiscal cliff.

The WSJ urges Mitt Romney to explain what he will do differntly than Presidents Obama and GW Bush, including on the dollar.

From First Trust, Brian Wesbury highlights Wednesday’s Fed policy statement.

In The WSJ, Stephen Moore reports the Senate’s Postal Service bailout.

On his website, Dilbert creator Scott Adams defends the rich.

The Sound Money Project features a video on inflation:



From Project Syndicate, Keynesian Stephen Roach defends China on trade and the yuan.

At Bloomberg, Jared Diamond notes Japan’s tremendous demographic challenges.

Thursday round up: Ryan on tax competitiveness; Baum on inflation; Moore on the Buffett Rule.

The NY Post excerpts US Rep. Paul Ryan’s (WI) speech on tax competitiveness to the GW Bush Institute.

In The WSJ, Dan Henninger reports the Left’s attack on Ryan’s budget.

On The Kudlow Report, Steve Forbes discusses the economy:



At Bloomberg, Caroline Baum opposes calls for higher inflation.

From The Council on Foreign Relations, Benn Steil critiques the Volcker Rule.

Reuters reports on China economic and currency liberalization initiatives.

On C-SPAN, Stephen Moore discusses plans to raise tax rates:



From Heritage, John Stossel discusses media opposition to free market ideas.

Monday items: Domitrovic and Stoll on the new Nobel Laureate; Benko on US/China currency debate; Mundell on the Greek debt problem.

From Forbes, Brian Domitrovic adds the new economics Nobel Laureate, Thomas Sargent, to the growing list of Phillips Curve debunkers.

In The NY Sun, Ira Stoll notes Sargent’s skepticism of Keynesian stimulus.

From last week’s Roll Call, Ralph Benko argues the floating dollar’s reserve status is responsible for the US/China trade imbalance.

Also from last week on Bloomberg, Robert Mundell explains that a Greek default would spread damage to the US:



At RCM, Bretton Woods Research suggests the Occupy Wall Street protestors are motivated by the monetary-induced weak economy.

On Business Week, Caroline Baum claims a flat tax would reduce the corruption opposed by the Occupy Wall Street protestors.

From Herald Scotland, Antony Akilade provides a detailed history of gold and fiat currency.

At Future of Capitalism, Ira Stoll rebuts the claim that the 1950s and 1990s prove that high taxes can correspond with high growth eras.

On The Kudlow Report, James Pethokoukis discusses the Tea Party’s hostility towards GE:

 
From International Liberty, Dan Mitchell argues Republicans should make no deal on the budget and allow the sequestration process to run its course.

On Forbes, John Tamny reports from the Nantucket Project on innovation.

At his blog, David Frum outlines what Republicans get wrong on economics, some of which is good but he includes “it is wrong to fetishize the exchange value of the dollar against other currencies.”

Tuesday items: Multiples responses to the Obama/Buffett tax hike argument; Tamny on bank bailouts; The WSJ chides Romney's China stance.

AP rebuts the President’s (and Warren Buffett’s) claims regarding tax rates paid by the rich.

The WSJ critiques the Obama/Buffett analysis.

On NRO, Larry Kudlow bashes the President’s tax attack.

From The Fiscal Times, Steve Forbes opposes tax increases on the rich.

At The WSJ, Paul Gigot comments on the President’s tax proposal:

 

At RCM, John Tamny notes that three years after the bailouts, the banking system is weaker.

On Café Hayek, Don Boudreaux echoes Douglas Irwin’s claim that Smoot-Hawley played a minor role in the Great Depression.

In The WSJ, Bret Stephens predicts the eurozone’s break up.

Alhambra Investments foresees a breakup of the euro.

The WSJ chides Mitt Romney for his rhetoric on China’s currency.

London’s Chatham House features documents from its 1929-31 conference on The International Gold Problem.

Sanjuktamoorthy.com explains Robert Mundell’s desire for a single world currency.

In The Washington Times, Richard Rahn notes that elevated inflation combined with ultra-low interest rates means a huge tax on savers.

On Bloomberg, Caroline Baum reports the Fed’s upcoming replay of Operation Twist.

On The Kudlow Report, James Pethokoukis debates the President’s low poll numbers:

 

In The NYT, Bruce Bartlett advocates rolling back tax code expenditures.

From First Trust, Brian Wesbury argues a new recession is unlikely.

At The Weekly Standard, Jonathan V. Last suggests China’s One Child Policy will prevent it becoming a great nation.

The Huffington Post reports Newt Gingrich will unveil a Contract with America 2012. No word as to whether currency and exchange rate reform will be on the agenda.

In The NYT, conservative Keynesian Ben Stein supports for higher taxes on the rich.

At COAL, Paul Krugman claims the current crisis is caused by a failure of demand, but that supply-side problems may be emerging.

Weekend edition: Mundell on a stronger dollar; Lewis, Jenkins, Forbes on the euro; Toomey on fast growth.

From Korea’s JoongAng Daily, Robert Mundell expresses concern about a stronger dollar and calls for a stable euro/dollar exchange rate.

On Forbes, Nathan Lewis argues the Eurozone’s economic problems shouldn’t undermine the euro.

In The WSJ, Holman W. Jenkins, Jr. suggests the euro is working as it should:

Those who say if only Greece still had its own currency, so much pain would have been avoidable, exaggerate. Under no possible currency regime would Greece have been able to go on forever borrowing money from foreigners to live beyond its means or its willingness to work. The same is true to lesser degree of other troubled European economies, including Portugal and Spain.

All along, the challenge of the euro was the challenge that undid the gold standard—to make "the law of one price" prevail across multiple countries in the age of interest group democracy. "One price" in one country works—Americans will pick up and move 3,000 miles for a job, but even in America, not without pain.

Yet the nostalgia for a Europe of independent currencies is mostly nostalgia for an illusory shortcut—even more so as services, rather than tradable goods, become the overwhelming source of employment in modern economies. Greece, with its sun and history, has every potential to make a happy, privileged existence inside the euro zone. Today's growth gap between Europe's north and south, which some say proves the unwisdom of a common monetary policy, is hardly organic—it's the product of their common mistake in loading too much debt on unreformed southern economies in giddy expectation of euro-based prosperity.

At RCM, Joe Calhoun says Paul Krugman is right that defaulting on debt can be healthy.

On Yahoo Finance, Steve Forbes addresses Greece’s debt problems:



The WSJ editorial board argues the dollar’s decline has been good for wealthier, heavily invested Americans but terrible for blue collar workers and the middle class.

The WSJ reports Sen. Richard Shelby (AL) will urge Fed Chairman Bernanke to adopt and explicit inflation target.

From IBTimes (UK), Gabriel Mueller compares the dollar and gold price of the 1970s to the present (h/t: Ralph Benko).

At RCP, U.S. Sen. Pat Toomey (PA) supports Tim Pawlenty’s economic growth proposal.

RCP: Tim Pawlenty has come out with what many consider to be a very pro-growth economic plan. Would you support Pawlenty's plan?

Toomey: I haven't had a chance to break down and study every element of his plan, but I am very enthusiastic about the fact that he has made economic growth -- encouraging that growth through tax reform, lowering the top marginal rates, and the abolition of the tax on capital gains -- that he has made it the centerpiece of his campaign is very constructive and very good news. A very important part of our message needs to be our ability to restore economic growth and job creation. Now, [Pawlenty] has established a very ambitious goal of 5 percent economic growth.

RCP: Do you think that's a reasonable goal?

Toomey: If we had really dramatic tax reform, if we got our fiscal house in order, if we reform the big entitlement programs, if we rein in the regulators, and if we expand trade, I think it is entirely possible. You could average that. We could have a wave of innovation and investment that could very well produce something like that and it's a good goal to have.

From The WSJ, Stephen Moore analyzes the weak recovery.

On Bloomberg, Caroline Baum suggests unstable tax policy is damaging the economy.

At Slate, Annie Lowrey acknowledges that some tax cuts do pay for themselves.

On The Kudlow Report, Stephen Moore and James Pethokoukis debate the economy and debt:




In The American Spectator, G. Tracy Mehan, III, wonders why we would raise taxes now.

At Forbes, Peter Ferrara recommends health care reforms that would achieve much of Obamacare’s aims without job-killing mandates.

On TNR, Jonathan Chait cites Bruce Bartlett arguing Republican claims about tax hikes’ negative impact is overstated.

At American Thinker, Henry Oliner defends supply-side economics.

Thursday items: Manhattan Institute posts SSE conference video; Lehrman discusses gold; Domitrovic on floating currency and manufacturing.

At Reuters, James Pethokoukis gives this blog a shout out. Thanks James!

The Manhattan Institute posts video of Tuesday’s supply-side convocation (part 2 here, part 3 here).

On CNBC’s Closing Bell, Lewis Lehrman discusses Reaganomics and the gold standard (h/t: Ralph Benko):



At TGSN, Brian Domitrovic makes the crucial point that the dollar standard has wrecked U.S. manufacturing.

Economics21 examines the dollar’s decline.

On The Kudlow Report, David Goldman debates the dollar’s future:



Bloomberg’s Caroline Baum suggests Japan’s crisis may worsen world inflation.

From Forbes, Steve Forbes advocates a flat tax to help Japan recover quickly.

At Forbes, Louis Woodhill recommends selling oil from the Strategic Petroleum Reserve when its ratio to gold creates an arbitrage opportunity.

Wednesday update: Swanson profiles Cochrane; Benko recounts fiat money's political disorders; Laffer talks inflation.

From Forbes, Bret Swanson surveys the compelling opinions of University of Chicago economist John Cochrane.

AT TGSN, Ralph Benko recounts the dollar standard’s three political disorders (here, here and here).

On The Kudlow Report, Art Laffer discusses the producer price index’s surge:



At RCM, John Tamny advises Japan to avoid bad economics as it strives to recover.

In The Journal, James Grant reviews Douglas Irwin’s book on Smoot-Hawley.

From Bloomberg, Caroline Baum notes Bastiat’s counter to Keynesian ideas about government projects creating prosperity.

From Mises.org, David Stockman unleashes on the 2008 bailout and the dollar standard:

Viewed more broadly, the carnage on Wall Street in September 2008 was the inevitable crash of a 40-year financial bubble spawned by the Fed after Nixon closed the gold window in August 1971. As time passed, the Fed's market-rigging and money-printing actions had become increasingly destructive — leaving the banking system ever more unstable and populated with a growing bevy of Too Big to Fail institutions.

The 1984 rescue of Continental Illinois; the 1994 Mexican peso crisis bailouts; the Fed's 1998 life-support operation for LTCM — were all just steps along the way to the fall of 2008.

Then, faced with the collapse of their own handiwork, Washington panicked and joined the Fed in unleashing an indiscriminate bailout capitalism that has now thoroughly corrupted the halls of government, even as it has become a debilitating blight on the free market.

In The WSJ, Newt Gingrich and Peter Ferrara advocate making the Bush tax rates permanent.

At The Journal, Stephen Moore reports congressional conservatives are unsatisfied with the pace of spending cuts.

On the Peter Peterson funded Fiscal Times, James C. Cooper cites weak dollar advocate Fred Bergsten (of the Peterson Institute for International Economics) calling for dollar depreciation to boost exports. The irony is, the biggest barrier to US exports is the dollar standard Bergsten helped create in the 1970s.

At Mises.org, Frank Shostak argues economic growth doesn’t cause inflation.

Thursday round up: Rove on growth, Woodhill on the Fed, Goldman on inflation.

In a bellwether WSJ column, Karl Rove argues Republicans can’t succeed without a pro-growth/supply-side message.

At Forbes, Louis Woodhill suggests the Fed’s combination of quantitative easing plus paying interest on reserves is causing commodity inflation even while housing, labor and car prices are falling.

On The Kudlow Report, David Goldman debates the dollar and inflation:



At Politico, Steve Forbes compares current policies on energy and the environment to the Carter era.

In Business Week, David Malpass argues spending cuts will attract foreign capital and thereby increase employment.

At CNBC, Steve Forbes discusses the dollar:



On Forbes, Jerry Bowyer notes that without devaluation the U.S. might be near default.

Bloomberg’s Caroline Baum suggests Keynesian economics is stuck in the Dark Ages.

Also on Bloomberg, David Malpass analyzes the Fed’s impact on the world economy.



In The WSJ, Keynesian (and gold standard critic) Barry Eichengreen echoes weak dollar guru Fred Bergsten in predicting the end of the dollar’s reign in favor of a three currency world.

From the archive, Brian Domitrovic comments on Eichengreen’s Golden Fetters.

On The Freeman, Howard Baetjer Jr. rebuts claims that inflation has non-monetary roots.

Monday round up.

From the Freeman, Gerald P. O’Driscoll, Jr. summarizes the Fed’s impact on world inflation levels.

In The WSJ, Robert Barro suggests unions are bad for economic growth.

On The Kudlow Report, Stephen Moore debates Mark Zandi on the economic impact of spending cuts:



At The NY Times, Christina Romer explains the Keynesian case for more aggressive quantitative easing, an advantage of which, she says, would be a lower dollar.

From Bloomberg, Caroline Baum asks Fed Chairman Bernanke a few questions.

On David Letterman, U.S. Sen. Rand Paul (KY) defends tax cuts and lower spending.



The Daily Caller reports a poll that suggests voters would blame Democrats for a government shutdown.

On his blog, conservative Keynesian John Taylor disputes Goldman Sachs’s economic analysis.

Thursday round up.

In a must-read from RCM, Louis Woodhill runs the numbers and finds economic growth is far more effective at balancing the budget than spending cuts.

From Bloomberg, Caroline Baum notes America’s many economic strengths.

Cato’s Steve Hanke examines the Middle East and North Africa's misery index.




On Forbes, Ralph Benko advocates a smaller warfare/welfare state.

Also from Forbes, Jerry Bowyer notes that democracy can be as tyrannical as autocracy.

In The WSJ, James K. Glassman explains why his Dow 36,000 theory didn’t come true, but omits the dollar’s volatility since 1999 from his analysis.

The first major change is that the relative economic standing of the U.S. is declining. The Congressional Budget Office estimates that U.S. growth will average a little more than 2% over the next 70 years, compared to about 3.5% during the second half of the 20th century. This is a stunning decline.

The reasons? One is a demographic imbalance, with too few workers supporting too many retirees and other non-workers. Another is a growing preference for European-style security. Still others include inefficient investment in human capital, especially K-12 education, and an enormous buildup of debt partly meant to prevent financial catastrophe in 2008-09. Meanwhile, developing nations like China, India and Brazil are growing far faster than the U.S....

But there is a second kind of risk, the kind that we can't really measure or expect—the murder of 3,000 Americans by terrorists in a single day, the Dow losing 1,000 points within minutes in a "flash crash," or home values in the U.S. suddenly plummeting. These discontinuous risks—or "uncertainties," as the famous University of Chicago economist Frank Knight called them—are multiplying in a world in which technology provides instantaneous connections among markets and allows just about anyone to do just about anything, anywhere.

The Financial Times reports on a Goldman Sachs study that says deep budget cuts will slow the U.S. recovery.

Keynesian Stephen Roach applauds China’s plan to consume more.

Thursday round up.

On Frum Forum, Austin Bramwell corrects the left’s Laffer Curve myths.

At Forbes, Ralph Benko notes the importance of raising the economy’s rate of growth.

On The Kudlow Report, Brian Wesbury discusses inflation expectations:



From yesterday’s WSJ, David Malpass advises Republicans to unify on a debt-ceiling proposal (reprinted at Growpac).

On RCM, John Tamny argues government should stop subsidizing the housing market.

At NRO, Larry Kudlow sees price inflation rising.

From Forbes, Jerry Bowyer notes the connection between economic freedom and prosperity.

At Bloomberg, Caroline Baum suggests the Federal Reserve is overshooting on inflation.

Thursday round up.

In The WSJ, Art Laffer recounts Reaganomics' successes.

At NRO, Larry Kudlow discounts the parallels between Reagan and Obama.

On CNN, U.S. Rep. Paul Ryan (WI) questions Federal Reserve Chairman Ben Bernanke on inflation:



At Bloomberg, Caroline Baum cites the latest example of how a falling dollar changes business behavior.

On RCM, Louis Woodhill suggests unions are out of step with the 21st century economy.

From last week, Paul Krugman notes the lower median income since 1973, but fails to connect it to the end of the dollar’s peg to gold.



From the archive, Nathan Lewis explains the falling dollar’s impact on U.S. wages.

In last month’s WSJ, Dilbert creator Scott Adams recommends alternative ways to raise taxes on the rich.

McSweeney’s provides a satirical look at supply-side economics. (Hat tip: Yoram Bauman.)

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.

Wednesday update.

Courtesy of Ralph Benko, The Lehrman Institute introduces its new website, The Gold Standard Now. Sign up for free updates on the main page.

On Forbes, Econoclasts author Brian Domitrovic offers a terrific assessment of China’s currency position.

At The Kudlow Report, Steve Forbes cites John F. Kennedy and Bill Clinton as models for President Obama:



On NRO, Larry Kudlow predicts the new Republican House will pull Washington in a supply-side direction.

At TAS, W. James Antle, III advocates fusionism between spending hawks and supply-siders.

Cato’s Dan Mitchell draws five lessons from Ireland’s economic crisis.

At Kudlow, David Goldman sees good news in gold’s decline and has been buying equities:



However, Goldman remains pessimistic on employment.

On Bloomberg, Caroline Baum scoffs at the Keynesian notion that economic overheating could lead to inflation.

At NRO, Kevin Williamson notes rising prices and the falling dollar, and makes the crucial point that, “CPI jumps are not inflation, they are a reaction to inflation.”

On Reuters, James Pethokoukis reports Dan Clifton’s analysis that income growth is key to the next election.



At Forbes, Richard Salsman correctly ties gold’s 400% rise since 2001 to the stock market’s flat performance, but offers a confused analysis of why. A better explanation is here.

On TNR, liberal Ruy Teixeira applauds President Obama’s tax cut deal, citing job growth as vital to his reelection hopes.

In The Washington Times, Richard Rahn applauds think tanks for improving market literacy.

Wednesday round up.

On Forbes, Brian Domitrovic likens President Obama’s tax cut shift to JFK’s shift in 1961 away from his Keynesian advisors.

At Human Events, Art Laffer recommends voting for the tax deal, saying liberal focus on class warfare will cost Democrats votes while stimulating their “anti-social retinue of freaks and weirdos.” (Stet.)

On The Kudlow Report, James Pethokoukis discusses the President’s pro-business shift:




At The American Spectator, Jeffrey Lord remembers Jack Kemp’s final advice to Barack Obama.

From last month on Forbes, Reuven Brenner suggests a gold-backed currency will restore investor trust in the economy. Part II is here.

On CNBC’s NetNet, Steve Forbes argues the tax deal is as good as Republicans are going to get.

At Alhambra Investments, Joseph Calhoun outlines the need for more pro-growth policies:

It just so happens too that a shift to better economic policy in the US is exactly what the world economy needs right now. Despite the prevailing, overwhelmingly bullish sentiment regarding stocks, commodities and future economic growth, there are a still a lot of potential problems that could derail the rosy view of the world. Europe’s sovereign debt problems - which are really European bank debt problems - have not yet been resolved but the road to recovery could be eased in the short term by a lower value for the Euro. Better US economic policy may speed that process if it means capital flows back to the US. The developing world’s emerging inflation problem would also be eased by a reversal of the hot money flows that are at the root of the problem. Capital and price controls as are being tried - along with some fairly aggressive monetary tactics - in China and other emerging markets are crude tools that are bound to fail unless a more favorable investment environment is crafted in the developed world. Better economic policy here that reduces capital inflows to China, Brazil and other emerging markets not only eases trade frictions but will reduce inflation there while increasing investment here. It is bad US economic policies that are causing many of the world’s economic imbalances not currency manipulation in Asia. Better US economic policy is the only proper remedy.

But the just announced deal on the Bush tax rates is not nearly enough to attract capital back into productive investments. The relative changes in exchange rates between fiat currencies are not the important metric to watch. We will know that policy has truly changed for the better when the price of gold and other commodities fall and then stabilize at lower levels. You want stimulus? What would be the effect on US growth if oil dropped by 50%? Or copper? Or any of a number of other commodities? What if all that capital tied up in gold were to flow into productive investments?

At The Pittsburgh Tribune-Review, Don Boudreaux rebuts trade deficit phobia.

On Bloomberg, Caroline Baum speculates that the left’s opposition to low tax rates stems from a zero-sum worldview.

At NRO, economist Scott Sumner maligns gold-based money in favor of GDP targeting.

From Vlad Signorelli, Bretton Woods Research comments on Richard Holbrooke’s death:

Holbrooke, Afghanistan & the Economy

[According to the surgeon who last spoke with the late, longtime U.S. diplomat Richard Holbrooke, Holbrooke`s last words were, "You`ve got to stop this war in Afghanistan." Certainly, the loss of Obama`s top civilian official dealing with the AF-Pak situation only adds to the looming crisis. Only yesterday, the Washington Post quoted Afghan President Hamid Karzai as saying, "If I had to choose sides today, I`d choose the Taliban."

Yet, while the spotlight is on the Obama Administration and how it will fill the hole left by Holbrooke, the enormous costs of our continued involvement in Afghanistan are passing by with barely a mention in the mainstream press or political establishment. Richard Vague, a Republican and CEO of Energy Plus, points out in a recent oped below that the Administration currently spends $119 billion per year on Afghanistan, whose gross national product is only $14 billion per year. Given such astounding proportions, it may be only a matter of time before the GOP`s fiscal conservatives break their virtual silence on AF-Pak expenditures and excite a national debate next year on the amount of blood and treasure risked during recessionary times. We suspect that some of these anti-Afghanistan fiscal conservatives will emerge from the new Tea Party contingency in Congress. BWR]

Article here.

Wednesday round up.

At The WSJ, Thomas Cooley and Lee Ohanian explains that the average marginal tax rate on capital income, which includes all forms of taxable capital, is near 37 percent and that cutting it would yield substantial benefits.

On Bloomberg, Caroline Baum deconstructs Fed Chairman Bernanke’s 60 Minutes appearance.

In Politico, U.S. Rep. Paul Ryan (WI) outlines his approach to deficits and the economy:

I have studied the field of economics since I was 18 years old, and it is who I am. My economics training and understanding definitely guide the way I formulate policy so that you get the best outcome to maximize growth. I am a pro-growth conservative, and I very much believe — passionately — that what we are trying to achieve here is a growth agenda instead of an austerity agenda. Where the press and conventional wisdom get this wrong is [in saying] that we need nothing but a root canal and straight talk and pain and suffering. Joe Scarborough was throwing that up to me the other day on TV. That’s not true. That’s what will happen if we kick the can down the road. ... How much time we have left before we have bitter European austerity fixes is anybody’s guess. But we know that is coming sooner rather than later.

On Bloomberg TV, Steve Forbes assesses the tax cut package’s impact.

The WSJ applauds the tax deal but notes its two-year limit creates continued uncertainty.

At CNBC, Forbes sounds positive about the tax deal:




On Forbes, Brian Wesbury and Robert Stein see the President’s tax cut agreement encouraging faster growth.

At Asia Times, David Goldman explains why he is still pessimistic about US growth.

On PBS’s Newshour, Stephen Moore debates Paul Krugman on the tax cut deal.

Wednesday update.

At Forbes, Lawrence A. Hunter provides a terrific supply-side history and strategy for stabilizing the euro/dollar exchange rate.

The WSJ editorializes that China’s financial system is increasingly strained by its peg to the dollar:

But on its central bank bills and repos, it [China] is borrowing at short-term rates of about 1.5% to 2%. On the asset side of its balance sheet it is earning less than 1.5% on five-year U.S. Treasurys. If the Fed succeeds in pushing down U.S. borrowing costs further, and inflation in China forces more interest rate increases, the spread on $2 trillion of foreign reserves is going to become costly. Not to mention that the yuan is appreciating against the dollar….

In the near term, tightening credit could also expose the weaknesses in China's corporations and put the banks under strain. As long as the lending spree keeps going, companies appear healthy, banks' margins are fat and nonperforming loan ratios are low. The PBoC recently raised borrowing rates by 25 basis points, and the markets expect another rise before the end of the year. Lending quotas, China's main tool for controlling credit growth, could also be cut. For many companies, this could come as a rude shock.

For a long time, the question put to China bears has been what would spark a crisis. Capital controls mean that there is little possibility of capital flight, and the government stands behind the state-run banks so there seems to be no systemic risk. While we wouldn't be so bold as to predict a crash, inflation is one way in which China's goldilocks economy could come to an end and the bears be proven right.

Bloomberg reports the weak dollar is, as predicted, sending investment funds out of the U.S.

On The Kudlow Report, Sen. Judd Gregg (NH) discusses the Fed’s actions:




Caroline Baum points out the illogic of devaluing the dollar to improve the trade deficit.

Also in The Journal, an editorial warns against forcing an EU bailout of Ireland:

Ireland, at least, is taking the overspending problem seriously. It would be in much better shape if not for that open-ended guarantee to bank creditors. Repeating Ireland's mistake on a continental scale won't save the euro, and could harm it. This week, German Chancellor Angela Merkel said that "if the euro fails, then Europe fails." But the euro is a currency union, not a debt union—at least it wasn't until last May.

Mrs. Merkel has it backwards. If the euro zone, in violation of the treaty that created it, effectively assumes the debts of all its members, it would do more damage to the credibility of the currency bloc than a haircut for its lenders. If Ireland, like Greece, cannot pay its debts, it needs to restructure them, and the sooner the better.

The Atlas Foundation Sound Money Project releases Judy Shelton’s Guide to Sound Money.

In The WSJ, Seth Lipsky anticipates Ron Paul’s ascendency to chairman of the House subcommittee that oversees the Fed:

Most exciting is the prospect that Dr. Paul will be able to bring into the national conversation such figures as, say, Edwin Vieira Jr., the visionary lawyer who has become the sage of the idea of constitutional money. That's a reference to the unit of account to which the Founders were referring when they twice used the word "dollars" in the Constitution, and which they codified in the Coinage Act of 1792 as 371¼ grains of pure silver, the same as in a then-ubiquitous coin known as the Spanish Milled Dollar, or its free-market equivalent in gold.

If Dr. Paul does accede to the chairmanship of the monetary subcommittee, he will, in but a few months, gavel it to order on the 40th anniversary of the summer in which President Nixon closed the gold window and brought an end to Bretton Woods. Yet a few weeks ago, former Fed Chairman Alan Greenspan himself, speaking at the Council on Foreign Relations, warned that "fiat money has no place to go but gold." Even the president of the World Bank, Robert Zoellick, has just called for restoring a role for gold in the monetary system.

The great debate is finally starting up again. Who better to host it in Congress than the diminutive doctor who, more faithfully than anyone else on the Hill, has for more than a generation stood for the idea of sound money?

The NY Sun echoes Lipsky’s op-ed.

Also on Kudlow, Stephen Moore worries that tax rate extensions may fall through: