Weekend update.

At Forbes, Nathan Lewis explains why many economists favor floating currency.

Also on Forbes, Bill Flax makes the libertarian case for a gold-backed currency.

In The WSJ, monetarist Allan Meltzer likens current Fed policy to the 1970s:

In the 1970s, despite rising inflation, members of the Federal Reserve's policy committee repeatedly chose to lower interest rates to reduce unemployment. Their Phillips Curve models, which charted an inverse relationship between unemployment and inflation, told them that inflation could wait and be addressed at a more opportune time. They were flummoxed when inflation and unemployment rose together throughout the decade.

In 1979, shortly after becoming Fed chairman, Paul Volcker told a Sunday talk-show audience that reducing inflation was the best way to reduce unemployment. He abandoned the faulty Phillips Curve thinking that unemployment was the enemy of inflation. And he told the Fed's staff that while he thought highly of their work, he did not find their inflation forecasts useful. Instead of focusing on near-term output and employment, he changed the Fed's policy to put more emphasis on the longer-term reduction of inflation. That required a persistent policy that President Reagan supported even in the severe 1982 recession.

We know the result: Inflation came down and stayed down. The Volcker disinflation ushered in two decades of low inflation and relatively steady growth, punctuated by a few short, mild recessions. And as Mr. Volcker predicted, the unemployment rate fell after the inflation rate fell. The dollar strengthened.

From RCM, Larry Kudlow suggests the economy is in better shape than the recent employment report indicates, but he worries about inflation.

In Human Events, Tony Lee recounts Jack Kemp’s role in Reagan’s success.

On Fox, Steve Forbes argues Reaganomics would fix today’s economy as well:




Cato’s Dan Mitchell posts a good video of Reagan.

The NYT quotes Art Laffer supporting Reaganomics with an unfortunate simile:

[O]ne of the most damning testimonials comes from a fan, the economist Arthur Laffer, ardent proponent of supply-side economics and father of the Laffer Curve.

“Trickle-down economics is if you feed the horse enough oats, the sparrow will survive on the highway,” he explains cheerfully.

On The Kudlow Report, Larry, Mrs. Kudlow, Stephen Moore and Craig Shirley discuss Reagan’s successes:




On Forbes, John Tamny argues Walmart boosts the economy.

At Dallas Blog, Fr. Charles McCloskey reviews Kemp-staffer John D. Mueller’s Redeeming Economics.

A Cato Institute study blames Fed monetary policy for recent market bubbles and warns of decapitalization.

Thursday items.

Politifact, The St. Petersburg Times’s fact-check site, finds Stephen Moore was wrong and Rachel Maddow was right about income growth during the Reagan years. (Original clip here.)

From 2007, Alan Reynolds denies that inequality has risen substantially since the 1970s.

Cato’s Dan Mitchell compares economic growth under Reagan vs. Obama.



On RCM, John Tamny points out that oil prices are set on the world market regardless of whether the U.S. buys oil from the Middle East.

At Forbes, Jerry Bowyer links Egypt’s current dollar-related upheaval to past world instability.

On The Kudlow Report, Larry Kudlow rebuts Ben Bernanke’s claims that the weak dollar hasn’t impacted grain prices in Egypt:




On The Gold Standard Now, Ralph Benko adds a third response to Paul Krugman on gold.

At The Daily Reckoning, Eric Fry blames the Federal Reserve for the dollar’s decline.

On The Daily, Will Wilkinson defends immigration.

Wednesday update.

On Forbes, Steve Forbes suggests budget deficits create an opportunity to downsize and reform government.

RCM reprints David Malpass’s statement to the U.S. Senate Budget Committee.

On The Kudlow Report, Larry suggests CPI statistics are unreliable:




At Business Insider, Jack Barnes advocates a new Louvre Accord to end competitive devaluations.

On Fox Business News, U.S. Rep. Ron Paul (TX) argues for less intervention in the economy.

At Conscience of a Liberal, Paul Krugman dismisses concerns about commodity prices, while unwittingly confirming that the Great Depression and the current malaise featured highly unstable dollars:




From last month at Just Facts Radio, Judy Shelton provides a superb overview of the dollar and gold.

At The American, Scott Shane explains that small businesses oppose Obamacare because it doesn’t make health coverage cheaper.

Heritage’s Ed Feulner recalls Reagan’s economic legacy.

The fable of the Left (the hard Left, anyway -- many others are coming around) is that this was all smoke and mirrors. But the facts tell a different story. Starting from the "stagflation" mess his predecessor handed him, Reagan created a genuine economic miracle. After a three-stage tax cut and a reduction in government growth, our economy began to expand -- by 31 percent from 1983 to 1989 in real terms. Americans of every class -- rich, middle-class and poor -- saw their wealth increase.

It was our nation's longest peacetime expansion in a long and prosperous history. By decade's end, we had added the economic equivalent of a new Germany to our gross national product. Inflation was cut by two-thirds, interest rates by half. Unemployment dropped to the lowest level in 15 years.

At The NYT, David Leonhardt makes the case for corporate tax reform.

On Cafe Hayek, Don Boudreaux refutes a manufacturing doomsayer.

Tuesday round up.

At Forbes, James K. Glassman explains that stronger growth is the best way to fight the deficit.

From Alhambra Investments, Joe Calhoun sees the world's leaders as clueless.

On The Kudlow Report, Don Luskin relies on CPI to deny inflation, while Michael Pento relies on money supply to confirm it:




On RCM, John Tamny argues inflation – properly defined as a decline in the monetary standard – is here but hidden by government statistics.

At Forbes, Brian Domitrovic suggests stable money is the kindest method to help the poor and less educated.

Also on Kudlow, John Rutledge and David Goldman assess inflation’s impact on emerging markets:




At Gold Standard Now, Domitrovic responds to Paul Krugman’s gold standard claim.

From Commentary, James Pethokoukis critiques Ben Bernanke’s approach.

In The WSJ, EU official Mojmir Haml outlines post-crisis thinking on monetary policy, but omits a stable gold price from his analysis:

Back in 1978, the U.S. economic historian Charles Kindleberger, in his now classic book "Manias, Panics, and Crashes: A History of Financial Crises," pointed out that financial upheavals had almost always been preceded by credit and property price booms. The bad news for monetary policy, however, is that credit booms have not always led to crisis. In other words, we still lack a rule of thumb for the future.

The basic proposition about the importance of credit, asset prices and the extent of financial intermediation in the economy, is slowly establishing itself in central bankers' post-crisis thoughts—although so far only at the general intuitive level described above. As soon as we start to ask when exactly, and at what level, the rate of growth of credit aggregates or asset prices start to become risky, or how large a leverage ratio and how high a risk mark-up are sustainable, we have no clear answers.

Moreover, we are frequently asking fundamental questions that we thought we had already answered: What prices should we actually target? How should we define new price indexes? Hacking at the foundations like this is painful in any field of study. Try asking a monetary expert for a precise definition of money. Where does money start and end? The layman may be surprised to learn that the answer is not necessarily clear cut.

From Business Insider, U.S. Rep. Ron Paul (TX) predicts it will take a crisis to bring about monetary reform.

In a NYT interview, White House advisor Gene Sperling confirms that the deal to maintain the Bush tax rates raised growth expectations, but omits the dollar from the discussion.

In The Washington Times, David Malpass advocates a constitutional amendment to cut the deficit.

From 1982, Jude Wanniski opposes a balanced budget amendment.

The WSJ editorializes in favor of allowing college educated immigrants to stay in the U.S.

Restrictionists claim that employers hire H-1B visa holders for "cheap labor," but companies must pay the higher of the prevailing wage or actual wage paid to "all other individuals with similar experience and qualifications for the specific employment in question." A Government Accountability Office study last month found that H-1B professionals in the same fields and age groups generally earn the same or more than their U.S. counterparts. Employers hire skilled foreign nationals based on merit, not because they can pay them less. Immigrants are also some 30% more likely than non-immigrants to start businesses.