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Thank tank: Defense cuts, the gold standard and skills

1) Michael Leachman of the Center for Budget and Policy Priorities argues that the stimulus has created more jobs than tracks.

2) Bruce Katz, Emilia Istrate and Jonathan Rothwell note that rising exports would help metropolitan areas disproportionately.

3) The Sustainable Defense Task Force proposes cuts to the defense budget.

4) Barry Eichengreen and Peter Temin compare the Gold Standard and the Euro.

5) Flavio Cunha and James Heckman review research suggesting that noncognitive skills are important for young people's life prospects.

By Ezra Klein  |  August 2, 2010; 4:00 PM ET
Categories:  Think Tank  
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Next: The six-for-six compromise


It's hard to believe there hasn't been more coverage today of the Court's denial of the Obama/Pelosi Regime's Motion to Dismiss Virginia's suit challenging the PPACA.

When denying the Motion to Dismiss, the Court found "No specifically articulated constitutional authority exists to mandate the purchase of health insurance or the assessment of a penalty for failing to do so." [p 24] and "The Secretary appeared to concede during oral argument, however, that if the ability to require the Minimum Essential Coverage Provision is not within the letter and spirit of the Constitution, then the penalty necessarily fails." [p.30]

Of course, this doesn't mean that the key "achievement" of the Obama/Pelosi Regime has been overturned... but it is a very favorable step in the process.

Posted by: rmgregory | August 2, 2010 4:13 PM | Report abuse

I just have to say, I'm a fan of Barry Eichengreen. He usually does pretty good work.

RE: the gold standard.

1. Populations grow, so money supply has to grow as well. To devote so many resources to a shiny metal just so the backing commodity grows with the population is silly. Some Gold Standard fanatics say to just change the rate, but doesn't that undermine the whole point?

2. Gold is bought and sold internationally and we have a floating exchange rate. We cannot fix the dollar to gold value unless we either fix our exchange rate like China does, ruining much of the reason people like the dollar, or we engage on MASSIVE market manipulations by constantly buying and selling gold, which is basically the same thing.

I can't see the Gold Standard as anything other than a system where we declare, "let's waste a lot of time, money, and resources so that we make our economic system even more inflexible during times of crises."

Barry is likely right that during good times, there are some advantages, but they are vastly outweighed by the damages done during bad times. It is not a surprise that the countries that abandoned the gold standard earlier had a quicker recovery from the great depression. Things would be different if such a standard prevented bad things from happening, but it doesn't. You could even argue that adherence to it even causes mad things to happen that could otherwise be avoided.

We're talking about a world where the response to a recession would be, "Quick, everyone to the mines!" Its like something the dwarves from Lord of the Rings would suggest. (hopefully that statement doesn't turn a bunch of LOTR fans onto the Gold Standard).

And that's not to mention the reverse...that mining would determine inflation/deflation. Find a new big gold mine? well, you just gave the government license to print more money. No big gold finds recently? well, since population increased, I guess we're forced to accept all the detrimental effects of deflation.

And, I'm not even mentioning the fact that there isn't enough gold in the world to back our monetary base at the going price without gold absolutely skyrocketing in value. Given that its a freely bought and sold commodity in international markets, that brings up a whole other set of problems.

Posted by: nylund | August 2, 2010 8:14 PM | Report abuse

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