October 21, 2003

Does Anybody at National Review Read Larry Kudlow's Columns?

Does any editor at National Review read Larry Kudlow's columns? Does Larry Kudlow read Larry Kudlow's columns?

Does Larry Kudlow even remember that three months ago he was treating two-month short-term movements in monetarist indicators as dire warning signs of the utmost seriousness?

And has he forgotten that monetary policy is carried out not by the U.S. Treasury but by the Federal Reserve?

October 21, 2003: Some economic research services have stirred up the worry pot over recently sluggish money-supply growth.... But this monetarist view hugely overstates the issue and misinforms the analysis.... Far more important than short-term swings in money measures like MZM is the recent and honest statement by Treasury Secretary John Snow that rising economic growth will bring higher interest rates during the next year or two. Not only did he seize the political high ground by linking an expected interest-rate rise to stronger capital formation -- rather than budget deficits -- he is also signalling acceptance of a stable or even stronger U.S. dollar as part of economic recovery...

July 27, 2003: What we needed from the Fed this week was shock-and-awe-level accommodation in the form of a 50-basis-point cut of the fed funds rate.... We didn't get it.... Overall monetary trends remain disappointing.... The monetary base -- the basic money-supply measure controlled by the Fed through its net purchases of U.S. Treasury securities -- has increased over the past two months by about 5 percent at an annual rate. But that's way down from the 11 percent base-money growth we were enjoying in the two months ending in April...

The most likely scenario is that neither Larry Kudlow nor the editors of National Review care about looking like real idiots to whatever small number of National Review readers know that monetary and interest rate policy is made by the Federal Reserve's Federal Open Market Committee in the Eccles Building rather than by the Treasury Secretary and his staff in the... why doesn't it have a better name than "Main Treasury" anyway?

Posted by DeLong at October 21, 2003 03:34 PM | TrackBack

Comments

If it's Tuesday, Larry is saying the FED is increasing the money supply too slowly. If you think the FED is increasing the money supply too quickly, wait until Friday and Larry will agree with you. Kudlow has been writing this flip flop nonsense for years.

Posted by: Hal McClure on October 21, 2003 04:17 PM

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If it's Tuesday, Larry is saying the FED is increasing the money supply too slowly. If you think the FED is increasing the money supply too quickly, wait until Friday and Larry will agree with you. Kudlow has been writing this flip flop nonsense for years.

Posted by: Hal McClure on October 21, 2003 04:20 PM

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I think the better (albeit rhetorical) question is ... _should_ anyone read Larry Kudlow's columns?

Posted by: Cervantes on October 21, 2003 04:37 PM

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Good catch.

Posted by: Stirling Newberry on October 21, 2003 04:46 PM

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The Fed doesn't control M1 or anything broader. They control amount of reserves in the banking system, the Fed Funds rate, the reserve ratio and the discount rate - typically the former two. What happens after they inject reserves is up to the lending system.

Broad money has been stagnant for 13 weeks now, coincidentally when 10-year treasury and mortgage rates jumped from 3% to 4.5%. We've had a bunch of foreign money - thank you China, Japan, Taiwan, et al - that has kept credit flowing, but it's really going to be hard to up the ante much longer. Credit bubbles need perpetual injections of credit. Retail sales and manufacturing are already decelerating. I hope nobody thinks we're going to have a smash bang Christmas if this keeps up.

Regardless, LK is still a coke-addled idiot, which makes him perfect for a CNBC slot.

Posted by: ts on October 21, 2003 04:57 PM

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Since when did NRO have one shred of credibility? I thought most people ignored them as right wing cranks.

Posted by: bakho on October 21, 2003 05:01 PM

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Here's another great piece of economic thought from the sleezebag Kudlow written in NRO on June 26, 2002:

Taking Back the Market By Force

Finishing the war strong may be the only way.
he economy is doing fine but the stock market is slumping. So far, the blame has rightly been placed on corporate corruption, dishonest accounting practices, and some ill-advised protectionist trade moves by the Bush administration. But these, it seems, are only partly to blame.

A worrisome USA Today/CNN/Gallup poll reveals that only one in three Americans believe the U.S. is now winning the war on terrorism, with a full half saying the war is at a stalemate. Compare this with last January, when two-thirds of the country said the U.S. was winning the war.

Could it be that a lack of decisive follow-through in the global war on terrorism is the single biggest problem facing the stock market and the nation today? I believe it is.

There has been a big drop in the American spirit. The euphoria surrounding the successful victory in Afghanistan has given way to a gnawing fear that Osama bin Laden and his evil followers have survived, regrouped, and are getting ready to hit us again. Sept. 11 may not be the seminal event. A new calamity may befall us, one that will surely close our businesses, shut our financial markets, block basic family security, and inflict unimagined pain on the nation. The down market is a manifestation of the pained expressions on our faces.

President Bush's speech Monday set down the clear democratic-reform principles necessary to change Palestine from a terrorist safe-harbor into a true member of the family of nations. He correctly delineated U.S. support for our democratic alley Israel, and just as clearly assigned the appropriate blame to Arafat's piece of the evil axis. He also communicated the principles of free elections, representative government, and the rule of law to the other Middle Eastern states that fail on all these counts. Bush wasn't only speaking to Iraq, Iran, and Syria, but also to Saudi Arabia, and perhaps even Egypt.

But these are just more words in this global and just war on terror. The president must now execute and follow-through in support of these fine principles. There can be no hesitation. In dealing with Israel and the PLA, there can be no return to the split-the-difference peace processes that have failed completely in the past.

Even more, Bush must not allow Saddam Hussein and Osama bin Laden to remain in play. That they are still around, poised to do catastrophic mischief, is a huge factor in just how far American confidence in this war has deteriorated.

To be sure, the greatest mistake Papa Bush ever made was leaving Saddam Hussein in place. Weakened or not, he is still there and Americans have never liked loose ends. With weapons of mass destruction at his disposal, and through his financing of terrorism worldwide, Saddam is a dangerous loose end.

Decisive shock therapy to revive the American spirit would surely come with a U.S. invasion of Iraq. Why not begin with a large-scale special-forces commando raid on the Iraqi oil fields? This will send a shot across Saddam's bow; an electrifying signal to all terrorist nations. The message will be that the game is up. Surrender now or you will be crushed in a short while.

Meanwhile, Saddam's cash flow can be cut off. Oil is his only crop, his single manufacture. Without money there will be nothing left to steal, and nothing to use to pay off his cronies.

A couple of weeks later a final assault on Baghdad can take place. A small war, to use Wall Street Journal editorialist Max Boot's lexicon, led by fast-moving special forces and leather-toughened Marines, and assisted by high-tech precision bombs and air cover, can get the job done. All-out war mobilization is unnecessary. Iraq will fall with much less. At the same time, U.S. special forces must conduct a similar sweep to root out the bin Ladens and al Qaedas along the Pakistani/Afghan border.

In his key war speeches thus far the axis-of-evil designation before Congress, the first-strike-preemption speech at West Point, and this week's Palestine-directed statement of institution-building through the principles of freedom Bush has kept democracy and a market economy central to solving this world terrorism crisis. But statements of principle only go so far. The spirit and security of the United States now require the instrument of war.

The shock therapy of decisive war will elevate the stock market by a couple-thousand points. We will know that our businesses will stay open, that our families will be safe, and that our future will be unlimited. The world will be righted in this life-and-death struggle to preserve our values and our civilization. But to do all this, we must act.

Mr. Kudlow is CEO of Kudlow & Co.

Just a wonderful human being, ain't he?

Posted by: Paul on October 21, 2003 05:50 PM

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Kudlow has written some entertaining columns at NRO Financial. My favorite was probably his vehement defense of Dick Grasso's pay package, which I ripped apart last month. Reading Kudlow and Stephen Moore on NRO Financial is enjoyable only because I get to play "spot the horrible economic reasoning." I can't imagine why anyone would take their economic coverage seriously, but I fear some people out there do.

Posted by: Dimmy Karras on October 21, 2003 08:18 PM

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The people that take them seriously are still holding their WorldCom and Enron shares awaiting a comeback.

Posted by: bakho on October 21, 2003 08:26 PM

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Dimmy:

"Spot the horrible economic reasoning" is an interesting NRO game, but it's the beginner level version. "Find the misrepresentation of fact" is the intermediate version. "Discover the contradiction with early opeds by the same author" is the advanced version. Each NRO article is like the old Bullwinkle & Rocky cartoons (silly humor for very small kids and more sophisticated humor the teenagers and adults). There is something in every article for every level of play. Of course, the editors of NRO never do realize that the only valuable service of their publications and Webcite is humor.

Posted by: Harold McClure on October 21, 2003 09:12 PM

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One of the things I find so fascinating about Kudlow is that he is utterly charming off camera. I was so dissappointed when he had Krugman on K&C and they failed to really mix it up -- maybe next time.

Off camera, he's had some very nice things to say about JFK and about Clinton -- he turns out NOT to be one of the far right's hypocritical moralizers who says one thing and does another.

I mat frequently disagree with some of his economic arguments, but I like him personally. His personal life is a great tale of redemption.

Posted by: Barry Ritholtz on October 22, 2003 04:25 AM

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I think some of the comments here are a bit harsh:

One of the things I find so fascinating about Kudlow is that he is utterly charming off camera. I was so dissappointed when he had Krugman on K&C and they failed to really mix it up -- maybe next time.

Off camera, he's had some very nice things to say about JFK and about Clinton -- he turns out NOT to be one of the far right's hypocritical moralizers who says one thing and does another.

I mat frequently disagree with some of his economic arguments, but I like him personally. His personal life is a great tale of redemption.

Posted by: Barry Ritholtz on October 22, 2003 04:29 AM

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This reminds me...a WSJ article the other day was saying that one reason that money supply growth has fallen is because foreign central banks are buying dollars to prevent $ depreciation.

This didn't sound right or at least sounded like something that requires more explanation. But that requires someone with more patience with the intricacies of the money supply & reserves than me.

Posted by: P O'Neill on October 22, 2003 07:09 AM

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At least "Main Treasury" is better than "Departmental Offices." "1500 Pennsylvania Avenue" is probably the best alternative, no?

Posted by: Dave on October 22, 2003 07:13 AM

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Easy to forget what the self has said. Its the classic case of people just flowing with the trend rather than making a genuine statements through valid introspection.

Posted by: 7 card stud on January 12, 2004 03:45 AM

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