Cato Senior Fellow advocates inflation as economic cure

Recent massive injections of bank reserves by the Fed are probably intended to reverse expectations of price declines. Under current conditions, slightly higher inflation and inflationary expectations could be the very balm essential for pulling the economy out of recession. Of course, it remains true that the Fed must later ensure that demand-driven inflation does not spin out of control. But that's a balancing act for the future, the need for which would not arise unless the economy recovers. Currently, price increase expectations appear to be a precondition rather than a hindrance to achieving an economic recovery.

~ Jagadeesh Gokhale, Senior Fellow, Cato Institute, "Inflation at Cato," LewRockwell.com Blog, April 27, 2009, by David Gordon

Michael Flynn on the credit crisis

Let's be clear: This is a Wall Street crisis, not a national economic crisis. The overall economy, while a bit weak, is still growing. Some politicians are comparing the current environment to the Great Depression. But in 1932, when the federal government last moved to bail out the banking sector, economic output had fallen 45 percent and unemployment was a staggering 24 percent. Today, economic output is actually up and unemployment is a historically modest 6.1 percent.

~ Michael Flynn, director of government affairs at the Reason Foundation, "The Roots of the Crisis; How did Wall Street get into this mess?," reasononline, October 1, 2008

Martin Masse: Karl Marx would be proud of the bailouts

In his Communist Manifesto, published in 1848, Karl Marx proposed 10 measures to be implemented after the proletariat takes power, with the aim of centralizing all instruments of production in the hands of the state. Proposal Number Five was to bring about the “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”

If he were to rise from the dead today, Marx might be delighted to discover that most economists and financial commentators, including many who claim to favour the free market, agree with him.Indeed, analysts at the Heritage and Cato Institute, and commentators in The Wall Street Journal and on this very page, have made declarations in favour of the massive “injection of liquidities” engineered by central banks in recent months, the government takeover of giant financial institutions, as well as the still stalled US$700-billion bailout package. Some of the same voices were calling for similar interventions following the burst of the dot-com bubble in 2001.

“Whatever happened to the modern followers of my free-market opponents?” Marx would likely wonder.

~ Martin Masse, "Bailout marks Karl Marx's comeback," Financial Post, September 29, 2008

Brink Lindsey on preventive war and the Iraq War (2003)

So on the general question of preventive war -- whether to make war now in order to avoid a worse war later -- my position is: It depends on the circumstances. The decision whether to go to war should turn on a pragmatic assessment of relative risks. Sometimes the balance will tilt in favor of action, sometimes not. In the particular case of Iraq in 2002, I believe the balance tilts strongly toward action.

Accordingly, it seems to me that a no-exceptions policy against preventive war rests ultimately on an untenable assumption: that unrousable passivity on the part of the greatest and most powerful country that ever existed will somehow yield the most favorable achievable conditions in the world -- that, in an intricately interconnected world, leaving everything outside our physical borders to the wolves will ensure that everything turns out for the best.

I don't buy it. Hostile regimes bent on relentless expansion and pursuing weapons of mass destruction are a threat to global security. Hostile regimes that could put weapons of mass destruction into the hands of terrorists are a direct threat to the lives of Americans. If regimes fitting either of these descriptions don't change their ways, military action against them should be an option.

Brink Lindsey, senior fellow at the Cato Institute, "Should We Invade Iraq?," Reason, January 2003