Some Chicago Boyz know each other from student days at the University of Chicago. Others are Chicago boys in spirit. The blog name is also intended as a good-humored gesture of admiration for distinguished Chicago School economists and fellow travelers.
Here.
…we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
Yeah. Look before you leap. A trillion here, a trillion there, you are talking real money.
Full text below the fold.
My daughter is furious at her geography text; her teacher, she tells us, is ok and more balanced. The book, however, finds much wrong with globalization (and little good) and even more wrong (and less good) with the green revolution. Although she has a quiet strength and has always been concerned with ethics, she has not been impassioned in her teen years as were her sisters. Within the last year, however, she has developed enthusiasms for bands few have heard, for certain styles, and for the free market. This is not because she reads (or cares much about) the blog on which her mother writes but because of a charismatic economics teacher (she took his enthusiasm with some salt, but came to believe he was generally right it fit with her worldview and her belief in self reliance). Lately, she’s bought an appropriate t-shirt, since his were the first books she seemed to really like. Her uncle pioneered no-till practices and Borlaug’s influence (lightly) touches our community. She was not unaware both globalization and the green revolution were complicated and some effects weren’t positive. But she also assumed that over all, life wasn’t a bad result.
You can find a very good FAQ on the subject here.
TJIC wrote an even pithier explanation that is also worth your time.
This really chaps my hide.
I’m watching news stories about hurricane Ike and the subsequent rise in gas prices in parts of the country far distant from the storms. Reporters and politicians mumbled confusedly about how prices could be going up already.
I’ll say it one more time for those who can’t be bothered to actually ask someone who owns a gas station. Gas stations set prices for the gas they sell today based on the wholesale price of the gas they will have to buy to replace it. Get it? The price you pay for a gallon today is the cost of the gallon the station will have buy to replace the one you just bought.
Gas stations sell gas at or near cost, so if they did not use replacement pricing any sudden spike in gas prices would shut them down and you couldn’t get any gas. I simply do not know why our public and private talking heads cannot understand and communicate this simple fact.
[update (9.13.2008.9:55am): More on gas pricing via Instapundit]
At first glance, Congressman Poe’s plan looks pretty good:
These calculations show that Ron Paul’s gold coin standard fails for the same reason that the classic gold standard failed-there isn’t enough gold in the world to prevent it from being wildly deflationary. Because all America has known for almost 70 years is inflation, many people have forgotten that deflation is much, much worse. The Great Depression was caused by deflation. People want stable money, but they aren’t willing to starve to get it.
Fortunately, it is possible to stabilize the dollar and create an economic boom at the same time. Judge Poe’s bill, H.R. 6690, would do this. It would require the Federal Reserve to use its Open Market operations to bring the COMEX price of gold down to $500/oz and keep it there. H.R. 6690 would also give the economy a powerful supply-side stimulus in the form of “first year expensing” of all capital investment.
H.R. 6690 defines the value of the dollar in terms of the market value of gold, but does not use gold as money. In this way, Judge Poe’s bill would not create a new and potentially unlimited source of demand for a scarce commodity. This is the key difference between H.R. 6690 and both Ron Paul’s approach and the classic gold standard.
As Paul Craig Roberts (and other people, I am sure) pointed out a long time ago, there are no laws preventing Americans from using gold as currency. The fact that almost no one uses gold as currency suggests that there are strong reasons to prefer paper dollars. The US dollar isn’t bad as currency goes, but it could be improved, mainly by being made less-subject to political caprice. Linking the dollar robustly to the market price of gold would be a big step in the right direction. How well HR 6690 would accomplish this is a different question, however. The devil is always in the details and unintended consequences. Congress might find it difficult to avoid post-hoc tinkering with the rule and thereby returning us to dollar uncertainty. And this bill has no chance of being enacted in the current political environment. But, at first glance, it sounds like the best currency-reform proposal yet.