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Howard Richman
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Dr. Howard Richman (mailto:howard@idealtaxes.com) is one of three generations of a family of economists. Howard co-authors the Trade and Taxes blog (http://www.idealtaxes.com/) and co-authored the 2008 book, Trading Away Our Future, published by Ideal Taxes Association... More
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  • D.J. McGuire: Obama may be "best-equipped American leader to take the CCP on"

    In a November 23 commentary (Is Beijing Using North Korea Again?) D.J. McGuire argues that President Obama is uniquely qualified to get tough with the CCP, China's Communist Party:

    Nixon’s fervent anti-Communist history made him practically the only American politician who could reach out to the CCP. Conversely, Obama’s left-wing history may make him the best-equipped American leader to take the CCP on.

    President Obama has already started taking a tough stance with China. McGuire notes:

    It began when the CCP tried to declare the South China Sea as its own lake. As expected, numerous nations in Southeast Asia cried foul. Not so expectedly, the United responded, essentially, “No.”

    One can only imagine the shock in Zhongnanhai from that.

    Perhaps the Communists believed that this was mere posturing for the voters. That notion disappeared with the President’s post-election tour of Asia (India, Indonesia, South Korea, and Japan). It could have been called the China Containment Tour.

    As I earlier pointed out, the United States has a wonderful opportunity at the moment. If the President and the Republican House each do what it has the power to do, without the other's consent, then America could balance trade and budgets at the same time. 

    President Obama could balance trade through a scaled tariff without congressional consent and the Republican House could balance the budget by refusing to raise the U.S. debt ceiling, without presidential consent. Together, these actions would solve America's long-term economic problems:

    1. The increased aggregate demand from balancing trade would offset the reduced aggregate demand from balancing budgets.
    2. The reduced real long-term interest rates from balancing budgets would offset the increased interest rates from balancing trade.
    3. Long term economic growth increases when government spending and trade deficits go down.
    4. Otherwise the U.S. faces an eventual crash either caused by a loss of government credit (due to budget deficits) or a dollar collapse (due to trade deficits).

    God has given the United States a unique moment. President Obama and the Republican House can, right now, fix America's economic problems. Will they do it?



    Disclosure: I own Chinese yuan through CYB
    Nov 24 11:17 AM | Link | Comment!
  • Obama's Failing Industrial Policy

    In October, U.S. manufacturing employment declined for the third straight month while overall unemployment remained unchanged at 9.6%. The graph below shows the number of workers employed in U.S. manufacturing since January 2008:

    President Obama has pinned his hopes for a manufacturing revival upon industrial policy, the idea that government bureaucrats should pick the companies of the future and subsidize them. His Export Promotion Cabinet is supposed to manage this policy. But the latest anecdotal report, from the Oakland Tribune, explains why it is not working:

    Solyndra Inc., the high-flying solar panel maker once touted by President Barack Obama as a model for a green energy future, said Wednesday it has scuttled its factory expansion in Fremont, a move that will stop the company's plans to hire 1,000 workers.

    Solyndra said it will also close an existing factory in the East Bay. That will leave the company with one Fremont factory, a new plant visible from Interstate 880....

    The company's fortunes sparkled in September 2009, when the Obama administration announced $535 million in taxpayer loans to finance construction of a new solar-equipment factory....

    Solyndra ... is behind its competitors in cutting costs, [GTM Research analyst Shyam] Mehta said.

    There is an alternative that would actually revive American manufacturing, the scaled tariff. Instead of relying upon bureaucrats, it relies upon the marketplace to choose winners and losers. It's rate goes up when our trade deficit with a country goes up, down then our trade goes down, and goes to zero when trade approaches balance. Such a tariff would increase American exports to the trade-manipulating countries, reduce American imports, and revive American manufacturing investment.

     



    Disclosure: No Positions
    Nov 05 10:26 AM | Link | 1 Comment
  • Message from the People of Kentucky: America's problem is Debt

    Victorious Kentucky Senator-elect Rand Paul eloquently summarized the message of his election in his victory speech on Tuesday. America's problem is debt.

    He is correct. First came excess consumer debt, which spread to include bank debt when houses fell in price, which spread to include government debt when the Bush and Obama administrations tried to stimulate the economy while letting the trade deficits expand. Here's what Rand Paul said:

    http://www.youtube.com/watch?v=ku1TX9dvHYE

    If you watch to the end, you'll see the snide sophisticated CNN commentators pretending that Paul is a madman threatening to cause a worldwide depression. But Rand Paul is right and Washington is wrong.

    There is a simple recipe for both short-term and long-term growth. Balanced Trade Monetarism simply requires: (1) balanced budgets, (2) balanced monetary growth, and (3) balanced trade.

    Tags: Economy, debt
    Nov 03 7:50 PM | Link | Comment!
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