An unlikely pair elevate the monetary policy debate
WSJ EDITORIAL
It would be hard to find two more unlikely intellectual comrades than Robert Zoellick, the World Bank technocrat, and Sarah Palin, the populist conservative politician. But in separate interventions yesterday, the pair roiled the global monetary debate in complementary and timely fashion.
The former Alaskan Governor showed sound political and economic instincts by inveighing forcefully against the Federal Reserve’s latest round of quantitative easing. According to the prepared text of remarks that she released to National Review online, Mrs. Palin also exhibited a more sophisticated knowledge of monetary policy than any major Republican this side of Wisconsin Representative Paul Ryan.
Stressing the risks of Fed “pump priming,” Mrs. Palin zeroed in on the connection between a “weak dollar—a direct result of the Fed’s decision to dump more dollars onto the market”—and rising oil and food prices. She also noted the rising world alarm about the Fed’s actions, which by now includes blunt comments by Germany, Brazil, China and most of Asia, among many others.
“We don’t want temporary, artificial economic growth brought at the expense of permanently higher inflation which will erode the value of our incomes and our savings,” the former GOP Vice Presidential nominee said. “We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.”
Mrs. Palin’s remarks may have the beneficial effect of bringing the dollar back to the center of the American political debate, not to mention of the GOP economic platform. Republican economic reformers of the 1970s and 1980s—especially Ronald Reagan and Jack Kemp—understood the importance of stable money to U.S. prosperity.
On the other hand, the Bush Administration was clueless. Its succession of Treasury Secretaries promoted dollar devaluation little different from that of the current Administration, while the White House ignored or applauded an over-easy Fed policy that created the credit boom and housing bubble that led to financial panic.
Misguided monetary policy can ruin an Administration as thoroughly as higher taxes and destructive regulation, and the new GOP majority in the House and especially the next GOP President need to be alert to the dangers. Mrs. Palin is way ahead of her potential Presidential competitors on this policy point, and she shows a talent for putting a technical subject in language that average Americans can understand.
Which brings us to Mr. Zoellick, who exceeded even Mrs. Palin’s daring yesterday by mentioning the word “gold” in the orthodox Keynesian company of the Financial Times. This is like mentioning the name “Palin” in the Princeton faculty lounge.
Mr. Zoellick, who worked at the Treasury under James Baker in the 1980s, laid out an agenda for a new global monetary regime to reduce currency turmoil and spur growth: “This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves toward internalization and then an open capital account,” he wrote, in an echo of what we’ve been saying for some time.
And here’s Mr. Zoellick’s sound-money kicker: “The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.” Mr. Zoellick’s last observation will not be news to investors, who have traded gold up to $1,400 an ounce, its highest level in real terms since the 1970s, as a hedge against the risk of future inflation.
However, his point will shock many of the world’s financial policy makers, who still think of gold as a barbarous relic rather than as an important price signal. Lest they faint in the halls of the International Monetary Fund, we don’t think Mr. Zoellick is calling for a return to a full-fledged gold standard. His nonetheless useful point is that a system of global monetary cooperation needs a North Star to judge when it is running off course. The Bretton Woods accord used gold as such a reference until the U.S. failed to heed its discipline in the late 1960s and in 1971 revoked the pledge to sell other central banks gold at $35 an ounce.
One big problem in the world economy today is the frequent and sharp movement in exchange rates, especially between the euro and dollar. This distorts trade and investment flows and leads to a misallocation of capital and trade tensions. A second and related problem is the desire of the Obama Administration and Federal Reserve Chairman Ben Bernanke to devalue the dollar to boost exports as a way to compensate for the failed spending stimulus.
As recently as this week in India, Mr. Obama said that “We can’t continue situations where some countries maintain massive [trade] surpluses, other countries have massive deficits and never is there an adjustment with respect to currency that would lead to a more balanced growth pattern.”
If this isn’t a plea for a weaker dollar in the name of balancing trade flows, what is it? The world knows the Fed can always win such a currency race to the bottom in the short run because it can print an unlimited supply of dollars. But the risks of currency war and economic instability are enormous.
***
In their different ways, Mrs. Palin and Mr. Zoellick are offering a better policy path: More careful monetary policy in the U.S., and more U.S. leadership abroad with a goal of greater monetary cooperation and less volatile exchange rates. If Mr. Obama is looking for advice on this beyond Mr. Zoellick, he might consult Paul Volcker or Nobel laureate Robert Mundell. A chance for monetary reform is a terrible thing to waste.
Copyright 2010 Dow Jones
Among all her other Reagan-like conservative credentials, one of her best attributes is that she drives anti-Semites and anti-Americans like Yamit nuts.
More evidence that Yamit knows little or nothing about the US or how corrupt Harry Reid and his union stooges are in Nevada who threatened union workers if they did not vote for Reid.
Reagan did not have an army of Democrat character assassins – and a couple of Israpundits – trying to destroy him and his family. Only one of her character assassins can insinuate that Palin is not charismatic. Reagan Democrats will also vote for Palin.
This is deliberately false propaganda by Yamit because the falsehood has been exposed numerous times in this forum recently. Federal receipts INCREASED following the Reagan and Bush tax rate cuts. Expenditures under Reagan and Bush were higher than necessary because Reagan had to rebuild the national defense capability which had been severely reduced by Carter and Bush had to do the same after the severe defense cutbacks by Clinton, then the economic effects of 9/11 and two wars of liberation.
Inspite of all this, the national debt was $8 trillion after 230 years from the first George W. to the last George W. Obama and the Democrats have increased it by $5 trillion in the 4 years since they took control of the Legislature after 2006.
We have seen you deliberately lying about both time and time again on this forum recently.
What are her favorables?
Are you sure or was it because the Republican establishment worked against him mainly to send a message to Palin and the tea party?
If you say so but that wasn’t my point which is Reid should have lost and by nominating the wrong candidate they the Tea party group can claim responsibility for keeping Reid in the Senate for 6 more years. The same calculus can be applied to national elections. The candidate must be strong enough to both overcome initial reservations and to not lose an election because of their own weaknesses. Angel should never have been nominted against even a weakened Reid. Florida is the example that should be emulated across the board. On the other hand Reid continuing will be good for the Republicans in 2012.
Reagan had 2 terms as Governor and a record to run on. He was also Charismatic and got a lot of democrats to vote for him. To be objective his term as president was at best a mixed bag and he more than any other president except Bush and Obama are responsible for the black hole of the National debt. I would not compare Palin to Reagan, even though I am not a Reagan fan. I consider him to be quite the anti-Semite, and I still have strong anti Reagan memories over how he worked us over here. He could give a great speech though.
I have some ideas but I am afraid you see what you want and filter out what you don’t.
Ted:
Mr. T – I don’t like your insinuation. This is a family orientated site.Impressionable kiddies, with raging hormones, are reading what you write.
Am requesting an immediate retraction.
Here we see Yamit’s unsupported allegation that the information about Palin is unsupported.
Is there anyone remaining on Israpundit who believes Yamit’s version of what Sarah Palin said about stay-at-home Moms? THE NEANDERTHAL KEPT LYING ABOUT IT WAY AFTER WE HAD HEARD WHAT SHE SAID FOR OURSELVES.
Is there anyone who can read and count on Israpundit who still believes that Palin did not play a huge role in the recent US mid-term elections where well over half of her endorsees won their seats, and the White House and the entire far left Soros wing goes into an incoherent frenzy with every Facebook entry and Tweet from her?
Then Yamit tries to make us believe what some un-named source said. This is Yamit’s standard of proof.
NO ONE IN THEIR RIGHT MIND WOULD BELIEVE SUCH AN UN-NAMED SOURCE. IMAGINE IF THE MEDIA WOULD REPORT WHAT YAMIT SAYS ABOUT PALIN OR THE US WITHOUT NAMING HIM AS A SOURCE WHICH WOULD IMMEDIATELY TELL US THAT IT WAS ALL BOGUS.
After all the proof REPEATEDLY provided Yamit is still trying to defend his BRAZEN FALSEHOODS and deny reality.
Palin endorsed far more winners than losers so obsessing on the few who lost is just playing into Yamit’s libel.
Charles Martel
Oy Vey- What barber’s college granted Charles his PhD? Graphically illustrates what mess our educational system is in!!
Palin was interviewed on the Cameron story, by John Zeigler and she denied its veracity. It was told to Cameron by insider’s intent on doing her harm. I believed her but of course she could be lying. But no one came out to say he was there and she is lying.
I think Palin would make a great President. She should be able to get the nomination but that isn’t for certain. Her present unfavourable of 52% must change for the better or her chances of becoming the next President are slim.
Alaskans rejected Miller because he was too conservative. Will Americans do the same with Palin.
To keep the record straight, Palin didn’t endorse Angel until after she won the primary. So don’t blame Palin for that loss. As for California, it was a lost cause to begin with. Miller makes the point better for you.
I am reading a book The Counter Establishment. It deals with the rise of neo-conservatism which brought us Reagan. Reagan presented himself as representing the little people and was anti establishment even when running as an incumbant. He was not a GOPPER. He was a conservative. Palin is doing the same thing. Not by chance but by design. The 2010 elections threw out the establishment to a large extent.
So she will now decide whether she can win as Reagan did. If she runs and loses,the next President will be hamstrung by a conservative congress. So her loss wouldn’t be catestrophic.
The big question is why did she reach her higgest unfavourables now. It seemed to me she was going from strength to strength. We must watch the polls in the coming month very closely. Palin said she will decide depending on “the lay of the land”. I wonder what will enter her calculus.
I am saying that your unsupported opinion is just that and saying something a million times like a broken record still does not make it true.Actually I like Palin and personally I liked Bush Jr. I thought most of the criticism of the left against Bush credible especial using hindsight. Liking Palin does not translate with me into thinking she is Presidential material nor the best republican choice. Think: Palins picks in California and Nevada. 3 cases where the Republicans should have and could have won but for running the wrong candidates when evaluted properly show that a similar scenario could happen in 2012 if Palin is chosen to be the republican nominee.
Funny before you I was almost neutral on Sarah Palin and my negativism was mostly based on my view that she won’t be nominated and if nominated would lose big to Obama. Your blind support of Palin and denying even the possibility of what others criticize her of is stimulating me to dig up everything I can just to prove not me right but you wrong.
The story was out there attributed to an unnamed source by a very reputable non left-wing member of the press and media. You choose to reject Fox News reporter and I chose to give him credibility..So you base your rejection on nothing and I on a credible source.
Remember: THE TRUTH WILL SET YOU FREE!
I’m not sure what Yamit is not getting here. Doesn’t he follow what is going on in the world? Oh, I forgot! The subject here is Sarah Palin, and Yamit is one of those trying to demean and demonize her. We saw that in the case of the video where he kept deliberately falsifying what she had said, even after we had all heard what she had said. We also saw it when he tried to demean the success of her highly successful endorsements in the recent mid-term elections.
When I say Palin is standing tall in spite the best efforts of Yamit and the small army of Democrat ninja character assassins who were tasked with destroying her and her family in 2008 I am simply stating a fact that Yamit can run from but cannot hide from. He can deny the truth all he likes, as he tried to do with the Palin video he was falsifying and her endorsement record. Others who saw the video and follow the news will know that what I am saying is true.
Saying it aint so does not make it so. What about all the rest? Cat got your tongue> Maybe a holy cow?
Well man, I got it from the Mama’s and the Papa’s, Mama Cass gave it to me, said it belonged to her costume designer. What costume she wore big sacks.
Based on Yamit’s upside down description of Sarah Palin’s video defense of stay-at-home Moms, Yamit’s answer to his own question would be, “Black!”
Hey! Where’d you get that picture of my bus man?
Hippi!
Green with pink polka dots—but that was in 1968 and only for me.
NAFTA,
North American Free Trade Agreement. Tough one for an Oil Expert and our most northern Governor. NAFTA is essentially American Canadian free trade agreement extended to Mexico. I looked it up but I was not a Governor nor the top ex of the Alaska energy commission. Could have been momentary memory lapse which could and has happened to us all or she just didn’t know.
Charles just for the heck of it what was the color of George Washington’s Great white horse?
Here we see another Palin-hating clown who has failed to destroy or even dent Sarah Palin’s character and now wants to move on. In the meantime, she goes from strength to strength.
There you go! Based on the testimony of Mr. Martell, not the un-named sources that underpin Yamit’s fantasy-world, Palin’s IQ obviously exceeds 140.
In Palin’s defense, I have a PhD, an IQ of 140, and several peer-reviewed published papers. I have also momentarily forgotten whether Antarctica surrounds the South Pole or North, wasn’t certain whether Chile had joined NAFTA, and occassionally misspell “occasionally”.
Here is the report that Yamit is referring to above:
http://latimesblogs.latimes.com/washington/2008/11/what-sarah-pali.html
I urge everyone to read this hit piece in the LA Times.
If you read the report you will see that it is yet another attempt at character assassination and a libellous smear against Sarah Palin, one of several from the left wing media who tried to destroy her reputation and her character.
As a testament to the woman, none of these ninja attacks on her and her family in the media worked to bring her down. She is still standing tall, more popular than ever as smear after smear were exposed as vicious libels.
That is not the point because there is no way to tell. The point is that weel over 50% of candidates Palin endorsed won.
We recently saw how Yamit deliberately falsified what Palin had said in a video, even after we had heard what she said for ourselves. He also lied about how many of the candidates she endorsed had won in the mid term elections. After catching him in that lie, he has started asking whether they would have won without her endorsement.
Why would anyone believe that Yamit is a true supporter of Israel based what he writes here? The guy just makes up stuff to create a wedge between Israel and its onlt real ally for reasons that are not clear to me.
AmericanEagle:
Time to move***Palin hadly warrants so much of our attention****She is a caricuture of her self. She will not be a candidate in two years and that’s IT.
What Sarah Palin didn’t know, as reported by Fox’s Carl Cameron
Palin didn’t know Africa’s a continent
You Betcha? 🙂
That’s nice but how many of her winners would have would have won without her endorsement? Since no-one could know for sure crediting her with their victories is specious contention at best.
Among some of her picks there are some that are quite questionable as conservative assets and will come back to haunt her. Like: Sarah Palin Endorses Carly Fiorina
The Demon Sheep of Zion.
I suggest all real conservatives and pro Israel supporters to read this, easily vetted as authentic on the web.
By the way she was supposed to return the 100k she received for keynoting the Tea party rally and as far as I can ascertain she hasn’t. Hmmm!
The allegations in the sentence are just plain false. Palin’s baggage has been almost entirely made up out of whole cloth by her political enemies, then spread by liberal stooges as we are seeing above.
http://www.conservatives4palin.com/2009/05/frivolous-ethics-complaints-score-card.html
She was the biggest single winner in last weeks mid-term elections.
Palin backed 43 candidates for the House, 30 won.
She endorsed 12 Senate candidates, 7 won.
That’s a fantastic track record of getting like-minded conservatives elected.
http://www.conservatives4palin.com/2010/11/governor-palin-mvp-of-2010-mid-term.html
Belman:
Ted, What is this obsession that you have with Palin? She has lots of baggage. She was a loser in the last election, and she was a quitter when she abandoned the governorship of Alaska.
That is a no no. Americans love a winner and hate a quitter.
Why would I apologize to anyone when I can see for myself that federal revenues INCREASED after the Kennedy, Reagan and Bush 43 tax rate cuts?
Go to: http://www.whitehouse.gov/omb/budget/Historicals/ and then click on the first line item: Table 1.1
Yeah. So what? The fact that 47% of Americans pay 2.9% of the total income taxes is due to creeping socialism pushed through by you liberals. It will take a president like Palin to fix this.
Yeah. So what? They also provide jobs for everyone else. Right now, they are holding back because they have no idea what your buddy Obama will dump on them next, which is why the unemployment rate has gone to 10% – 17% if you include those who have given up looking for jobs.
Besides, the top 20% are not a fixed group of people. The list changes constantly as fortunes are made and lost.
We are a capitalist society. Everyone wants to belong in that top 20% at some point in their careers, which is not that hard. Most Americans of Jewish and Indian and Filipino and Japanese heritage belong there.
Ted my comment disappeared before this one.
Reaganomics
Peter Schiff v. Art Laffer
Laffer is credited with Reaganomics.
Apologize to Peter Schiff
Reaganomics, read and consider.
I am mostly of the monetarist school.
How will America bring the enormous deficits under control without a civil war?
What you going to cut SS? Medicare> Prescription drugs, Obamacare is essentially additional deficits not current deficits. Many States are already essentially bankrupt, California and NY for example. Lay off millions of civil service workers? Reduce defense spending? All on lower taxes? If the dollar ceases to become the global reserve currency there will be a massive flight of wealth from America and that has already begun. Bond holders of trasuries and others will be vengeful if the devaluation becomes excessive too fast.
This is the real problem in America and nobody is coming close to addressing it! Since almost 50% of American wage earners pay little of no taxes, most tax cuts effect those in that top 20% of Americans. Trickle down economics is just another name for supply side economics.
20% of Americans hold 80% of the national wealth: there has been an “astounding” 36.1% drop in the wealth (marketable assets) of the median household since the peak of the housing bubble in 2007. By contrast, the wealth of the top 1% of households dropped by far less: just 11.1%. So as of April 2010, it looks like the wealth distribution is even more unequal than it was in 2007.
As far as I can see neither Republican conservatives or Liberal Democrats understand the problems and if they do , neither have a solution.
What provable nonsense.
According to Wikipedia, Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services, such as adjusting income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation. Consumers will then benefit from a greater supply of goods and services at lower prices.
The last three eras where tax rates were cut significantly were under Kennedy, Reagan and Bush 43. In all three cases cutting tax rates INCREASED federal revenues in the US and REDUCED deficits over what they would have been for a given level of federal spending. Anyone not bent on spreading false propaganda would have found the following information on the internet. These are actual federal Receipts and Outlays.
Go to: http://www.whitehouse.gov/omb/budget/Historicals/ and then click on the first line item: Table 1.1
Look at the Kennedy, Reagan and Bush 43 years and see whether federal revenues reduced once their tax cuts went into effect.
Ugggg!!!
Supply side economics is what has driven most of Americas deficits to date!!! I would not deem to call her a Neanderthal for advocating a failed economic theory.
Read Pls.
WSJ
Dynamic’ Scoring Finally Ends Debate On Taxes, Revenue. By Alan Murray. Wall Street Journal. (Eastern edition). New York, N.Y.: Apr 1, 2003. pg. A.4
The Death of Supply-Side Economics
For years, advocates of supply-side economics have justified repeated calls for tax cuts for high earners by arguing the cuts will pay for themselves by dramatically boosting economic growth and thus tax revenues. They have just as adamantly insisted that if only Capitol Hill’s official arbiter of the budgets, the Congressional Budget Office, would evaluate tax cuts through the prism of “dynamic scoring” — which projects the macroeconomic impact of tax cuts as well as the lost revenues they produce — their point of view would be vindicated.
Well, CBO has done just that with President Bush’s budget, and guess what? In a report prepared under the supervision of a supply-side economist handpicked by the White House and published last week, CBO concluded the president’s budget would make long-term budget deficits worse rather than better.
It’s taking a while to sink in, but that CBO document pretty much pronounced the death of the supply-side economics.
In an irony as rich as any tax-cut beneficiary, the first publication to really explain the report’s significance was the Wall Street Journal, whose editorial page has long been the Pravda of supply-siders, and the source of dozens of columns and editorials demanding dynamic scoring to reflect the “true” impact of big tax cuts. The headline over a column by Journal columnist (and CNBC Washington Bureau Chief) Alan Murray says it all: “‘Dynamic Scoring’ Finally Ends Debate on Taxes, Revenue.”
“Do tax cuts pay for themselves?” Murray asks. “That’s been the hot debate of American political economy for the better part of three decades. But it ended last week — with a whimper.” As Murray explains the CBO report, “The results: Some provisions of the president’s plan would speed up the economy; others would slow it down. Using some models, the plan would reduce the budget deficit from what it otherwise would have been; using others, it would widen the deficit. But in every case, the effects are relatively small. And in no case does Mr. Bush’s tax cut come close to paying for itself over the next 10 years.”
This comes as no surprise to the vast majority of mainstream economists, who have always treated supply-side claims with disdain, as representing one of those “free lunch” propositions that make sense mostly to politicians.
But for Republican politicians, the supply-side pitch has become the last-ditch argument for the huge, serial, high-end tax cuts that are in turn the centerpiece of the Bush Administration’s domestic policy. That happened the moment budget surpluses turned into deficits, making the GOP’s original “refund” argument for big tax cuts inoperative.
So far, there’s no sign the administration or congressional Republicans have taken notice of the death of supply-side economics. They’re still pushing for a big new round of tax cuts targeted to the top of the income scale, and still pretending that will simultaneously set off an economic revival and erase all the budgetary red ink they’ve spilled in the last two years. And maybe they’ll just stay in denial perpetually, repeating the ritual supply-side incantations as though they represented a living set of beliefs.
The only other rationale for perpetual tax cuts that has not already been invalidated by fiscal or economic reality is the “starve the beast” theory that cutting taxes and producing big budget deficits will eventually lead to the devastation of federal investments and programs that Republicans don’t have the political courage to propose cutting outright — a sort of gutless Gingrichism. That may actually be the real motivation for Republican fiscal policies, but it’s sure to be a loser with the American public.
So supply-side economics may have died a timely death. But don’t hold your breath until the failed faith’s congregation sings a requiem and finds a new church.
For the record, when some insider leaked that Palin didn’t know that Africa was not a country of what countries were in Nafta, he was lying. This has been proven to my satisfaction. She never said any of those things just as she never said she could see Russia from her house. She said “from Alaska”.
Where is your proof that Palin did not know where Africa is.
Bush has provided BILLIONS to help fight HIV/AIDS, TB and malaria in Africa,
I don’t know why Ted allows Yamit to shovel such manifest falsehoods that demean Israpundit.
You should know better than anyobe else that crap sinks to the bottom.
Elder’s was not writing in response to you. Listen to Ted. You will have to look in her books and speeches for the answers to your concerns.
By cutting tax rates and slowing federal regulations Reagan doubled federal revenues, reduced the Carter-induced inflation and interest rates, created some 21 million jobs, and helped the previous Pope to bring the old Soviet Union to its knees.
As you know, I listen to all Palin’s speeches and writings and AE is right on the mark in describing her policies. She has even said that Social Security must be addressed. Here is her follow up facebook post on monetary policy.
Obama’s Clever Way to Punt the Tough Calls: Driving the Dollar Down
She really does have gravitas.
You won’t want to miss Larry Elder’s column
Of Course Sarah Palin’s ‘Unfit’: She’s a Republican
Elder is comparing her to dumb dumber and dumbest. I’ll bet they all knew that Africa is a continent and not a country though except maybe Bush.
Did you ever consider that in a country of over 300 million these idiots are what comes to the top? The euphimism that crap rises to the top is not lost on me when I view the level of leadership the wise American populace seems to choose or get stuck with.
By the way the link to Elder never mentioned what economic policies Governor Palin would institute to save the American economy which is another euphemism meaning America itself? Why don’t you supply a link attributing Palin herself and her economic plan not yours or what you think it should be. You can’t can you? 😉
It was your Reagan economics that started big time Americas slide to the state we are in today.
Palin would follow the Reagan model by cutting tax rates across the board, slowing the growth of social spending, cutting unnecessary federal spending on things like the Education Department and climate change regulation, opening up oil exploration and drilling, repealing and revising the health care plan, and freeing up small and medium sized businesses from expensive but meaningless federal regulations and returning these responsibilities to the individual states who are closer to the problem. In general, freeing up the US economy from Obamaism.
http://townhall.com/columnists/LarryElder/2010/11/11/of_course_sarah_palins_unfit_shes_a_republican
The answer is neither fiscal nor monetary but industrial policy. New Deal 2.0 bitchez!
There are three ways to ameliorate a governments critical debt problem. Devaluation of the currency or raise taxes while reducing all unnecessary expenditures. The current government has chosen the former but so far has not tackled reducing expenditures. Therefore inflationary policies won’t solve the problem. It’s just another tax without the name.
What does Palin propose to do to reduce debt without the accompanying decrease in business activity and massive layoffs including the public sectors? Instead of 10% it could go to 30% unemployment and make American exports cheaper imports more expensive but except for big ticket items America no longer makes stuff other aren’t already making cheaper?
Palin is playing in the big leagues and getting respect.