12 Jul 2010

More Confirmation That Firing Frum Was the Right Thing to Do

Economics 3 Comments

I was reading Scott Sumner’s blog when I came across this quotation from David Frum:

The Obama administration is fretting over what to do next. More aid to states? Some kind of second stimulus? Or just hang on and hope for the best?

My own Republican Party is equally perplexed. It opposes more government spending. It wants the Bush tax cuts extended. But the Bush tax cuts are in place now — and they do not seem to have helped very much through these terrible two years.

I have a suggestion. I think we should overcome our inhibitions and rediscover the positive side of inflation. I know! I know! I’m a child of the 1970s too! I remember when menus came with little stickers affixed in a stack atop the original price. I remember crazed auction rooms where bidders scrambled to buy something, anything with their depreciating currency: paintings, suits of armor, Austro-Hungarian postage stamps.

But as awful as double-digit inflation was, single-digit deflation is worse. As triumphant as the victory over inflation was, we can’t always be re-fighting the last war.

This is a country deeply in debt. Inflation reduces the burden of debt — anonymously, impersonally, and across the board. I hope I don’t sound too nationalistic when I note that a lot of that debt is held by our Chinese friends. They ran huge trade surpluses with the United States when times were good. Time now for them to contribute a little back.

That last part (which I’ve put in bold) is my favorite. Forget Frum not understanding how the gold standard works–here he has descended into crude mercantilism. When times were good, the Chinese sent us TVs, clothes, and other goodies in exchange for pieces of paper promising that we would send them other pieces of paper (these latter with U.S. presidents on them). Now Frum thinks it’s time for those Chinese rascals to return the favor.

I don’t like a lot of AEI’s decisions, but, “If you canned David Frum, you made the right call.”

3 Responses to “More Confirmation That Firing Frum Was the Right Thing to Do”

  1. Jon O says:

    All the U.S. nationalists should be careful what they wish for with china. They can afford to revalue CNY higher with the size of the labor pool they have and still be competitive. Last month they had 600bil+ in new loans and %18.5 y/y M2 growth. They can afford all the stimulus they need to keep the masses docile. The U.S. can’t run its stimulus programs without a foreign bid in the treasury market, let alone any type of sizable selling.

    Its amazing that people out there actually believe the Chinese ruling elite are so stupid they haven’t come up with ways to deal with their USD reserves and account surplus. Eventually they are going to pull the plug and “stuff” will begin to flow east rather than west.

  2. Greg Ransom says:

    Frum was for rejecting anti-war conservatives from the conservative movement — before he was for throwing pro-war conservatives out of the conservative movement.

    Ditto gay marriage supporters / opponents.

    Frum is constantly calling for people to be drummed out the GOP or the conservative movement, just before he becomes one of those people.

    It’s always weird when someone brought up in the culture of another country tries to force everyone in America how to think and feel.

    And, yes, this goes for Obama as well.

  3. Bob Roddis says:

    Some more on Frum by Justin Raimondo:

    “One other happy result of the Coulter piece is that it has the neocons split, with David Frum over at his very weird web site – featuring banner endorsements by Joan Walsh and Stephen Colbert, no less! – complaining that one of his Frum-drones was dropped by David Horowitz’s Frontpage for daring the criticize Coulter. As an added bonus, Frum blames it all on Ron Paul. One can only look forward to seeing more neocon heads explode as the controversy progresses throughout the right-blogosphere. What next? Will Christopher Hitchens write a screed comparing her to Anne Morrow Lindbergh – “The Other Ann(e)”! One awaits these developments ….”