Richard J Grant

Published in The Tennessean , April 25, 2010 Chinese exchange rate flexibility would affect the US by Richard J. Grant Why did Treasury Secretary Timothy Geithner decide to delay a regularly scheduled report on international monetary policies? Apparently the report accused China of being a “currency manipulator.” Such accusations do not make for easy relations, but they are made to achieve a purpose. Speaking before a congressional committee, Federal Reserve Chairman Ben Bernanke claimed that the yuan is “undervalued” and hinted that the Chinese do this deliberately in order to promote exports. He suggested that the Chinese should allow more flexibility in their exchange rate to “address inflation and bubbles within their own economy.” Whatever faults the Chinese might have in their economic policies, accusations of currency manipulation are misleading. Most of the time since 1997, China has had a fixed exchange rate policy. Although from 2005 to mid-2008 the yuan was allowed gradually

Published in The Tennessean , April 18, 2010 High tax rates reduce trade value; we trade less by Richard J. Grant There is a conceptual difference between having a job and doing something useful. The difference is found in the purpose and in the relative importance of one action compared to other possible actions. If you were alone on an island, what would you do? If you wished to live, you would set about finding and making food, building shelter, and then work to provide for your next priority. If you wished to escape from the island, you might first estimate your location; then you would devise some method of communication and transportation. In such a simple setting, it is clear that survival depends on work. Someone must do that work. If you are able to provide for your survival needs sufficiently that you can occasionally take time off to go birdwatching, then that’s fine. It is your choice. But if you approach your life as though you have a right to a full-time career in birdwat

Published in The Tennessean , April 11, 2010 The Fed will find itself in a lose-lose situation by Richard J. Grant The Federal Reserve Board has a tiger by the tail. It knows it cannot hold on indefinitely; but it fears what will happen when it lets go. They know that sometime this year they will have to allow interest rates to rise. If they don't, the result will almost certainly be an upsurge in price inflation. But members of the Federal Open Market Committee also fear that if they allow rates to rise "too soon," they risk precipitating more symptoms of recession and prolonged high unemployment rates. Since late 2008, the Fed has been holding interest rates at artificially low levels to encourage borrowing and to prop up asset prices. But in order to do this the Fed has had to create a lot of new money. During that time, the monetary base, which is the most basic quantity of money, has increased by about 140 percent. Under normal circumstances the Fed would never have

Published in The Tennessean , April 4, 2010 Facts about health-care reform will doom the Dems by Richard J. Grant The losers of intellectual battles, especially in politics, often resort to a “red herring” defense. They deliberately attempt to divert attention from the original topic by presenting the audience with a new, largely irrelevant topic. The new topic is, figuratively, dragged like a real red herring across the trail to distract the pursuing hounds from the scent of the fleeing fox. In fox hunting this makes the chase more challenging. But in politics it is used to enable a devious faction to get away with bad arguments, or to lead voters’ memories away from the faction's most unpopular policy actions. As the political battle over health-care reform finally came to a vote, it was clear that although the final bill passed both houses of Congress, most citizens were unimpressed and remained opposed. The defiance of the popular will, as well as the sleazy techniques employed