24/7 Wall St.

By John Tamny of Forbes
 
“Money is nothing but a medium of exchange…” – Ludwig Von Mises, The Theory of Money and Credit, p. 31 By John Tamny
 
President Obama’s arrival in China has predictably generated all manner of commentary about the economic relationship between it and the United States. Not surprisingly, the majority of the commentary has been economically untrue, misguided, or both.
 
First up is the notion that China artificially keeps the value of the yuan lower than it would naturally be. What this commentary misses is that currencies aren’t commodities, rather they are concepts. Nothing else.

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By John Tamny of Forbes

“For one particular car produced by an American manufacturer, for example, 30 percent of the car’s value is due to assembly in Korea, 17.5 percent due to components from Japan, 7.5 percent due to design from Germany, 4 percent due to parts from Taiwan and Singapore, 2.5 percent due to advertizing and marketing services from Britain, and 1.5 percent due to data processing from in Ireland. In the end, 37 percent of the production value of this American car comes from the United States.”~Douglas A. Irwin, Free Trade Under Fire
 
With birthrates falling in wealthy nations, there’s a growing perception that those countries face a somewhat darker economic future for their perceived child deficits. The thinking is that with less people working and producing, countries with falling populations will see economic output drop due to a lack of young, able-bodied workers.

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John Tamny , Forbes

Recently the Dow Jones Industrial Average passed the psychologically significant 10,000 mark. This is an impressive feat for an index that was trading in the 6,000 range less than nine months ago.

While naysayers would correctly point out that the Dow remains flat compared to 10 years ago, the run-up since last spring can’t be dismissed out of hand. This is particularly true when we consider policies coming out of Washington that seem inimical to stock market and economic health.

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By John Tamny of Forbes
The great economist Henry Hazlitt once observed that “Economics is haunted by more fallacies than any other study known to man.” Were Hazlitt alive today, he surely would have a field day addressing the numerous economic fallacies offered up by our very own Federal Reserve Chairman, Ben Bernanke.
From his frequent assertions that economic growth is the cause of inflation, to his support of spending “stimulus” as though wealth redistribution actually drives economic activity, to his belief that simple money creation enhances the economy, it’s fair to say that the world’s most powerful central banker buys into a quite a few of these fallacies. Historians will write volumes on former President George W. Bush’s biggest mistakes in office, and while the left and right will have plenty to work with, it’s likely that for some at least, Bush’s appointment of Bernanke will loom large.

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By John Tamny

In a world full of paradoxes, Princeton economics professor and New York Times columnist Paul Krugman has become rich decrying what he deems “income inequality.” Only in America could an individual denounce the wealth gap while becoming the very person he denounces.
 
In that sense, it may be that polar opposites Karl Marx and Joseph Schumpeter were right: capitalism is seemingly its own worst enemy. In rich societies, commentators can become wealthy while trashing wealth creation.

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