While the world’s economies jockey one another for the lead in the currency devaluation derby, it’s worth considering the value of the prize they are seeking. They believe a weak currency opens the door to trade dominance, by allowing manufacturers to undercut foreign rivals, and to economic growth, by fighting deflation. On the other side of the coin, they believe a strong currency is an economic albatross that leads to stagnation. But the demonstrable effects of currency strength and weakness reveal the emptiness of their theory.

A country that attracts investment from abroad (through stable and fair governance, low taxes, a growing economy, and a productive labor force) and produces goods that are in demand on the global stage will generally see a rising currency. In essence, this is the reward for a job well done. Strong currencies then help nations stay strong by conferring greater purchasing power to its citizens and businesses, which keeps input costs low, thereby enhancing international competitiveness. Strong currencies also encourage savings, keep real interest rates low, lower capital costs, and allow for greater productivity and higher real wages.

It is often argued that a weak currency confers advantages in foreign trade. But the edge only results from putting exports on sale. Any merchant will tell you that it’s easy to sell more if you cut prices, but most would prefer charging full retail. However, exports are not an end in themselves, they are a means to pay for imports. The goal of an economy is not to work, but to consume. If citizens in one nation buy goods produced in another, they must pay with exports. When a nation’s currency appreciates imports cost less and fewer exports are needed to pay. This means goods and services at home will be cheaper and more plentiful, and citizens won’t need to work as hard to buy them. This is the definition of rising living standards.

But when it comes to relative currency valuations, the United States dollar exists in a world of its own. As the international reserve, the dollar is the de-facto beneficiary of any other country’s intervention. When countries intervene, they do so specifically against the dollar. In addition, many countries, (China and Taiwan for instance) maintain a pegged relationship to the Greenback. Therefore in a world dominated by interventionist banks, the factors that push the dollar have been inverted. The dollar falls when fundamentals either improve abroad or deteriorate at home (both cases increase the propensity for intervention). The rest of the world’s currencies compete on their own merit. As a result, it is not an accident that over the last decade Australia, New Zealand, and Switzerland, three of the world’s strongest economies, have produced strong currencies.

Since 2001, all three have had generally appreciating currencies, accompanied by steadily rising exports, strong economic fundamentals, and low unemployment. From 2001 to 2012, the Kiwi Dollar appreciated by 98% against the U.S. dollar, but its exports in local currency terms increased by 40% (170% in U.S. dollar terms). Over the same time frame, the Aussie dollar appreciated by 103% and exports increased by 102% in local currency (and 305% in U.S. dollar terms). In Switzerland the story was the same, currency up 82%, exports up 53% in local terms and (and 175% in U.S. terms). Where exactly did they encounter export troubles due to their rising currencies?

Read More at Lew Rockwell . By Peter Schiff.

Sen. Ted Cruz (R-Texas) on Wednesday made it crystal clear that he is not in Washington, D.C. to play ball with politicians in either party, especially when it comes to the nation’s out of control debt. In fact, he reveled that he doesn’t trust Republicans or Democrats to do the right thing.

Cruz objects to starting House-Senate budget negations unless Democrats take a debt limit increase off the table. He reiterated his stance on Wednesday, saying he is not willing to put blind trust in his own party.

“The senior senator from Arizona (John McCain) urged this body to trust the Republicans. Let me be clear, I don’t trust the Republicans,” Cruz said on the Senate floor. “And I don’t trust the Democrats.”

Sen. John McCain (R-Ariz.), with the support of Sen. Susan Collins (R-Maine) on Tuesday ripped some of his fellow Republicans for blocking the budget negotiations.

Read More at Yahoo! News . By Jason Howerton.

But not everyone is eager to embrace the opportunity for America. There are even concerns, raised on the pages of the New York Times and Foreign Affairs, that the new U.S. position on the world energy stage has major downsides. Notably, we’re told that this radical change could destabilize many of the world’s fragile hydrocarbon exporters, from Russia to Nigeria and from Venezuela to the Middle East.

These experts warn that the loss of oil revenue will cause shock waves in countries that have increased spending (and mischief making) on the prospect of eternally selling $100 per barrel oil to the world, especially to America. This was apparently a negligible worry when alternative energy advocates were touting the importance of (expensive) biofuels and batteries for breaking America’s “addiction” to oil.

Let’s state the obvious: U.S. energy abundance is an unalloyed good for the American economy. The U.S. can start eviscerating its whopping $750 billion a year trade deficit, which rivals the combined deficits of the next 30 largest nations. It is a terrible drag on U.S. growth. And 40 percent of our deficit comes from just one import: oil. We can now eliminate those costs.

How? First, do everything possible to encourage yet more production of hydrocarbons to cut imports. Second, use cheap domestic fuel to manufacture and export more energy-intensive products like chemicals and fertilizers. Third, join the small club of crude oil and natural gas exporting nations. The problem with the last deficit-killing strategy is that exporting American natural gas or crude oil is illegal.

 Read More at Real Clear Energy .  By Mark Mills.

How many times have you heard President Obama express concern for the middle class? More than you can count. Even his website begins “Learn more about Barack Obama and why he’s fighting for the middle class.”[1]

But if we look at Obama’s actual record rather than his rhetoric, it is plain that the middle class has been one of the leading victims of his presidency.
The decline in median family and median net worth that began during George W. Bush’s presidency has continued under Obama. Citing recent Census Bureau data, the Pew Research Center published data showing that the only one of nine income levels whose net worth increased in the 2009-2011 period was the highest-earning cohort—those earning over $500,000 per year.

Income, too, showed a similar pattern: During Obama’s first term, the wealthiest 20% of households eked out a 2% gain while incomes for the rest fell.[2] Obama may talk tough about “the rich,” but they have been the only group that have gotten richer on his watch.

Further evidence of Obama’s silent war on the middle class is the explosion in the number of Americans receiving food stamps. When Obama took office in January 2009, there were approximately 32 million Americans on food stamps; as of April 5, 2013, that numbered had swollen by nearly 50% to 47.3 million.[3] Poor Americans already had been receiving food stamps before Obama became president; the increase came from members of the middle-class Americans that his policies had initiated into hard times.

 Read More at frontpagemag.com . By Mark Hendrickson.

With equity and bond markets at or near all-time record highs, with all financial assets consistently shrugging off bad – or worse – news as the riskiest of assets continue to find consistent upward bids, we find ourselves in familiar and bubbly territory.

I can summarize my thoughts in one sentence: How could this be happening again so soon?

In times past, it took one or more generations between bubbles for people to financially recover and forget the painful lessons before they would consider doing it all again. Yet here we are, working our way through our third set of bubbles in less than two decades, which must be some sort of world record.

I will confess to my biases right up front: I have always been deeply skeptical of both the practice of running up debts at a faster pace than income (the common practice of the entire developed world over the past several decades) and the idea that the solution to too much debt is more debt, enabled by cheaper money courtesy of thin-air money printing.

Read More at peakprosperity.com . By Chris Martenson.

Pento: “Bullard said that any exit would start probably within the next several months at the earliest. And that’s if it was the result of stronger data. The data I see is very, very weak. We had a Non-Farm Payroll report that came out last month which showed that aggregate hours worked were down.

Goods producing jobs lost 9,000 jobs. So the economy is very weak. Regional manufacturing surveys are very weak. There is no reason for the Federal Reserve to take away the punch bowl….

“The stupidity of the Federal Reserve is so blatant here. In 2007 the Federal Reserve took interest rates to 5 1/4%, and the economy cratered because we had $48 trillion in debt, and a Debt/GDP ratio of 353%. Interest rates rose and the economy cratered.

We were entering a Great Depression. Bernanke lowered interest rates to 0%, and debt increased all the way up to $54 trillion. So why would anybody believe, Mr. Tepper or anybody else, that if the Federal Reserve stopped buying all of our issued debt, if they started to raise interest rates and unwound their balance sheet, and rates went anywhere near 5%, why wouldn’t the same thing happen again?

Read More at KingWorldNews .

If they’re watching the headlines, it’s no wonder, really. After all, they reason, if billionaires can’t make money in gold, how can anyone else?

Here’s the latest example. Just yesterday a prominent news service reported that John Paulson’s $700 million gold fund lost about 47% year-to-date, with almost half of that loss taking place in April after the yellow metal’s flash crash.

But for all the billions of dollars in bullion and paper gold coming onto the markets, there are plenty of buyers who aren’t complaining about new opportunities to pick up this “eternal metal” at prices we haven’t seen for a couple of years.

Whether you’re a gold bear or a bullion bull right now, or somewhere in between, have you ever stopped to wonder just how this metal became the world’s most-precious?

Read More at uncommonwisdomdaily.com . By Sean Broderick.

In an agency-wide memo sent to staff on his first day on the job, acting IRS Commissioner Danny Werfel acknowledged the turmoil that has enveloped the agency, while insisting the tax administrators play an “indispensable role” for the nation.

“It has obviously been a difficult last few days for all of you,” he wrote. “There is rightly concern among the public about the trust that they place in the IRS to administer the tax code fairly and help America’s taxpayers understand and meet their tax responsibilities. Working together, it is up to us to restore that trust and ensure that the IRS remains the exceptional, indispensable organization it has always been.”

Werfel came to the IRS after serving as a top official at the Office of Management and Budget. President Obama appointed him to take over the IRS following the resignation of Steven Miller, the previous acting commissioner, who stepped down after the IRS admitted to improperly targeting Tea Party groups.

Werfel told IRS employees that his first step as the new head will be to find out exactly how an IRS office in Cincinnati came to single out Tea Party groups for additional scrutiny in the processing of tax-exempt applications. He made clear that any hint of political bias at the agency is unacceptable, and vowed to cooperate with all investigators, including Congress, in figuring out what happened.

Read More at The Hill . By Peter Schroeder.

Washington began this year by definitively breaking with its recession mindset. Until then, the ostensible focus had been on protecting the economic recovery, regardless of budgetary impact. For this reason, the Bush tax cuts, which liberals had always vehemently opposed, had been extended and a 2% payroll tax break included.

The economy muddled along, with its strongest praise being that it didn’t reverse. However, the view of higher taxes as an economic deterrent evidently did – at least within the Administration.

On January 1, several large tax hikes (the largest being a return to Clinton-era top earner rates, an end to the 2% payroll tax break, and several Obamacare tax increases) went into effect. Unlike the Bush tax cuts, these increases are not temporary, but permanent.

Despite being now four months old and sizable, little mention has been made of them. Instead, all the attention has focused on the sequester’s $85 billion in spending cuts, mandated through this fiscal year (October 1). They amount to just 2.3% of what federal spending would have been and just 0.5% of projected GDP. Yet, to hear Washington tell it, you would think the entire economy rested on reversing them.

Read More at Forbes . By J.T. Young.

LONDON— Federal Reserve Chairman Ben Bernanke’s signal that monetary policy will remain loose gave stocks another lift Wednesday, paving the way for many indexes to advance to new record highs.

Following a run of upbeat U.S. economic news, largely related to housing and jobs, there had been talk in the markets that the Fed may soon put a brake on its super-easy monetary policy, which has boosted liquidity in financial markets over the past few years.

The Fed is currently making $85 billion in bond purchases every month to encourage lending and spur the U.S. economic recovery. Though a number of economic indicators have improved, the U.S. economy isn’t posting historically high growth rates and unemployment is relatively high above 7 percent despite consistent falls in recent months.

Though Bernanke said that keeping interest rates low for a long time can unbalance the financial system, he warned that a change in policy now would “carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further.”

Following his comments to lawmakers in Congress, European and U.S. stock markets pushed sharply higher while the dollar lost some of its shine.

Read More at OfficialWire . By Pan Pylas.