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Why Does Terrorism Spare Switzerland?

TownHall Latest columns - Wed, 03/22/2017 - 22:35
PARIS -- This week marks the one-year anniversary of Belgium's deadly terror attacks: bombings that struck Brussels Airport and a subway station near the European Parliament building. 2017-03-22T00:01:00-04:00 2017-03-23T03:35:01Z Rachel Marsden

Republicans Are Finding it Hard to Play Defense

TownHall Latest columns - Wed, 03/22/2017 - 22:35
Monday's House Intelligence Committee hearing, billed as the first public inquiry into Russia's election meddling, was a spectacle with an obvious lesson: Offense is easier than defense. 2017-03-22T00:01:00-04:00 2017-03-23T03:35:01Z Jonah Goldberg

Transgender Challenges

TownHall Latest columns - Wed, 03/22/2017 - 22:35
Determining one's own sex or that of another used to be a simple matter. 2017-03-22T00:01:00-04:00 2017-03-23T03:35:01Z Walter E. Williams

Gorsuch v. Death, Inc.

TownHall Latest columns - Wed, 03/22/2017 - 22:35
St. Augustine, who has not been nominated to the U.S. Supreme Court, made a straightforward argument against a right to suicide. 2017-03-22T00:01:00-04:00 2017-03-23T03:35:01Z Terry Jeffrey

US $$$ for UN Rapes

TownHall Latest columns - Wed, 03/22/2017 - 22:35
Globalists and Democrats shrieked last week when President Donald Trump proposed cutting American funding for the United Nations by 50 percent. 2017-03-22T00:01:00-04:00 2017-03-23T03:35:01Z Betsy McCaughey

Ryan voices confidence on ObamaCare repeal as conservatives call to ‘start over’

Fox News (Politics) - Wed, 03/22/2017 - 19:00
House Speaker Paul Ryan said Wednesday that Republicans have a “moral obligation” to avert an ObamaCare collapse and pass replacement legislation heading for the floor, voicing confidence about the looming vote despite mounting turbulence inside the party.

Freeing Religion from Government’s Grip

TownHall Latest columns - Wed, 03/22/2017 - 18:35
On Feb. 2, at the National Prayer Breakfast, President Trump said, My administration will do everything in its power to defend and protect religious liberty. 2017-03-22T00:01:00-04:00 2017-03-22T23:35:02Z Robert Knight

US-Backed Syrian Militia Has Office in Moscow: Dunford

Fox News (Politics) - Wed, 03/22/2017 - 17:22
Syrian-Kurdish YPG fighters backed by the U.S. have offices in Moscow, Joint Chiefs Chairman Gen. Joseph Dunford said.

Originalism

TownHall Latest columns - Wed, 03/22/2017 - 15:35
A fantasy look at how Judge Gorsuch might have answered Feinstein. 2017-03-22T00:01:00-04:00 2017-03-22T20:35:01Z Joel Goodman

JFK's diary reveals fascination with Hitler, compared to 'legend'

Fox News (Politics) - Wed, 03/22/2017 - 15:15
A young John F. Kennedy filled dozens of pages in what historians believe to be his only diary.

Immigration: As LA rebuffs Trump's order, others embrace it

Fox News (Politics) - Wed, 03/22/2017 - 14:17
Los Angeles went a step further than the rest of the country in protecting illegal immigrants on Tuesday – it passed a directive forbidding firefighters and airport police from cooperating with immigration authorities.

Trump team communications captured by intelligence community surveillance, Nunes says

Fox News (Politics) - Wed, 03/22/2017 - 13:43
Members of the intelligence community "incidentally collected" communications from the Trump transition team during legal surveillance operations of foreign targets, a top Republican lawmaker said Wednesday afternoon.

Should Trump let TrumpCare fail?

Fox News (Politics) - Wed, 03/22/2017 - 13:35
It's his first major legislation, but should he let it crash and burn?

David Brock, Media Matters founder and Clinton ally, suffers heart attack

Fox News (Politics) - Wed, 03/22/2017 - 13:34
David Brock, founder of the liberal watchdog group Media Matters for America and a longtime ally of Bill and Hillary Clinton, reportedly suffered a heart attack on Tuesday.

Dems seize on Supreme Court ruling tossing legal standard set by Gorsuch

Fox News (Politics) - Wed, 03/22/2017 - 13:00
Senate Democrats on Wednesday seized on what, for nominee Neil Gorsuch, was an ill-timed ruling from the Supreme Court – a unanimous decision that ended up tossing a legal standard set by Gorsuch nearly a decade ago.

Arkansas governor expands where concealed weapons are allowed

Fox News (Politics) - Wed, 03/22/2017 - 12:45
Arkansas' governor signed a sweeping gun rights measure into law on Wednesday that will allow concealed handguns at state colleges, some bars, government buildings and even the state Capitol.

Mattis Presses for Immediate $30 Billion Extra for Defense

Fox News (Politics) - Wed, 03/22/2017 - 11:38
The military badly needs an infusion of $30 billion extra in defense spending, Defense Secretary Jim Mattis said Wednesday.

Kindest Cuts

TownHall Latest columns - Wed, 03/22/2017 - 11:35
"Devastating!" shouts Chuck Schumer. Even Republicans are unhappy. Big spending "conservative" congressman Hal Rogers calls President Donald Trump's proposed budget cuts "draconian, careless and counterproductive." 2017-03-22T00:01:00-04:00 2017-03-22T16:35:01Z John Stossel

Trump labor pick Alexander Acosta grilled on Epstein case

Fox News (Politics) - Wed, 03/22/2017 - 11:33
As expected, President Trump’s nominee for Labor Secretary, Alexander Acosta, faced tough questions about a decade-old case, as he faced down lawmakers Wednesday morning during his Senate confirmation hearing.

It's Time to Dump Most Central Banks

Cato Recent Op Eds - Wed, 03/22/2017 - 11:30

Steve H. Hanke

On March 16th, the New York Times carried reportage by Peter S. Goodman, Keith Bradsher and Neil Gough, which was titled “The Fed Acts. Workers in Mexico and Merchants in Malaysia Suffer.” The theme of their extensive reportage is that U.S. monetary policy is the elephant in the room. It is the elephant that swings exchange rates and capital flows to and fro in emerging-market countries, causing considerable pain.

Emerging-market countries should dump their central banks and local currencies.

The real problem that all of the countries mentioned in the New York Times reportage face is the fact that they have central banks that issue half-baked local currencies. Although widespread today, central banks are relatively new institutional arrangements. In 1900, there were only 18 central banks in the world. By 1940, the number had grown to 40. Today, there are over 150.

Before the rise of central banking the world was dominated by unified currency areas, or blocs, the largest of which was the sterling bloc. As early as 1937, the great Austrian economist Friedrich von Hayek warned that the central banking fad, if it continued, would lead to currency chaos and the spread of banking crises. His forebodings were justified. With the proliferation of central banking and independent local currencies, currency and banking crises have engulfed the international financial system with ever-increasing severity and frequency. What to do?

The obvious answer is for vulnerable emerging-market countries to do away with their central banks and domestic currencies, replacing them with a sound foreign currency. Panama is a prime example of the benefits from employing this type of monetary system. Since 1904, it has used the U.S. dollar as its official currency. Panama’s dollarized economy is, therefore, officially part of the world’s largest currency bloc.

The results of Panama’s dollarized monetary system and internationally integrated banking system have been excellent (see accompanying table).

image

  • Panama’s GDP growth rates have been relatively high. Since 1994, when the Mexican tequila crisis commenced, real GDP growth has averaged 5.8% per year.
  • Inflation rates have been somewhat lower than those in the U.S. Since 1994, CPI inflation has averaged 2.3% per year.
  • Since Panama’s fiscal authorities can’t borrow from a central bank, the fiscal accounts face a “hard” budget constraint dictated by the bond markets. In consequence, fiscal discipline is imposed, and since 1994, Panama’s fiscal deficit as percent of GDP has averaged 1.7% per year.
  • Interest rates have mirrored world market rates, adjusted for transaction costs and risk.
  • Panama’s real exchange rate has been very stable and on a slightly depreciating trend vis-à-vis that of the U.S.
  • Panama’s banking system, which operates without a central bank lender of last resort, has proven to be extremely resilient. Indeed, it weathered a major political crisis between Panama and the United States in 1988 and made a strong comeback by early 2000.

To avoid the pain described in the New York Times reportage, emerging-market countries should dump their central banks and local currencies. They should follow Panama’s lead and adopt a stable foreign currency. Or, they could install a competitive currency regime, which would allow for more than one foreign currency to be used.

Steve Hanke is a professor of applied economics at The Johns Hopkins University and a senior fellow at the Cato Institute.

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