Power & Market
The Government of Poland announced this week that it is no longer providing weapons support to Ukraine, and that Warsaw will focus on building up Polish weapons stockpiles instead.
Prime Minister Mateusz Morawiecki said Wednesday, “We are no longer transferring weapons to Ukraine, because we are now arming Poland with more modern weapons.”
Warsaw's decision comes as diplomatic relations between Ukraine and Poland have worsened due to a dispute over imports of Ukrainian grain into Poland. The conflict has its roots in the fact that Russia has largely prevented Ukraine from exporting grain via its Black Sea ports. Ukraine then turned to exporting grain by land, with much of it going through Poland. Waraw, however, feared that a massive influx of Ukrainian grain in Polish markets would drastically cut incomes for Polish farmers. As in many European countries, farmers in Poland retain sizable political clout, and Warsaw moved to convince the EU to restrict Ukrainian grain sales in Eastern Europe.
Last week, however, the European Commission moved to allow Ukrainian grain sales across the bloc prompting unilateral bans on sales in Poland, Hungary, and Slovakia. Ukraine then sued all three countries in the World Trade Organization, and has accused Warsaw of "acting in Moscow's Interests."
Thus, Poland's decision to pull back its Ukraine support comes after weeks of threats from Kyiv and the ongoing trade dispute. It is unlikely, however, that Warsaw's latest move is a mere bluff designed to push back Ukraine's grain exports. There is good evidence that the Ukrainian regime is beginning to wear out its welcome with Poland. Polish president Andrzej Duda this week compared Ukraine to a drowning person who pulls down people who try to save him. Duda suggested it becomes "necessary to act" to "protect oneself from being harmed by a drowning person" who "can pull you into the depths."
Also notable is the fact that these moves from Warsaw come as election season, so comments like these can also be read as attempts to shore up support with significant voting blocs within the country.
Until recently, Poland was one of Ukraine’s strongest allies in the war. Now Polish President Andrzej Duda compares Ukraine to a desperate drowning person who can pull the rescuer down with them. pic.twitter.com/JzjiGlp5Rn— David Sacks (@DavidSacks) September 21, 2023
The fact that Poland is slowly souring on endless largesse for Ukraine is quite a reversal from 2022 when Warsaw was one of Kyiv's most enthusiastic supporters. Indeed, as we noted here at mises.org, Polish support for Ukraine was downright reckless with Polish calls for a "no-fly zone" and a Polish scheme to ship F-16s to Ukraine in an attempt to escalate the conflict. Poland has also been a key partner to Kyiv in continuing to provide safe haven to about a million Ukrainian migrants seeking to escape conscription, war, and economic devastation in Ukraine. Poland also spent more than 8 billion euros on supporting these migrants in 2022 alone.
The slackening support for Ukraine also likely stems from the fact that more astute observers have perceived that initial predictions about the potential for a Europe-wide Russian invasion were clearly wrong. Russian tanks will obviously not be rolling through Poland or Hungary any time soon, even if NATO completely withdraws from Ukraine.
It is not a given, however, that the current ruling party in Poland will be rewarded in the upcoming elections for its softening support on Ukraine. NATO's operations in Ukraine—funded overwhelmingly by American taxpayers, of course—still has many supporters in Poland. However, if the ruling party comes out of the election unscathed following its pullback from Ukraine, this will likely be bad news for Kyiv which has already lost its summer "offensive" and continues to endure unsustainable losses. The Russians aren't giving up their control of southeast Ukraine any time soon. Moscow must retain control of the Cherson regime to keep control of irrigation waters for the Crimea, and total control over the Sea of Azov is key to ongoing plans to open up the trade routes with the Caspian Sea and the Volga River basin.
The longer Ukraine fails to make any progress in its south, the more likely other European regimes will conclude that endangering their own domestic budgets and agricultural voting bases are no longer worth the trouble.
The Harmonized Index of Consumer Prices (HICP) consists of 12 subindices, which are weighted according to their shares in total household expenditures. If, for example, food and non-alcoholic beverages (subindex 1) account for 15% of expenditures, they should also be given a weight of 15% in the overall index. In this way, each expenditure category would be given the importance it has for an average household. This is the claim of official statistics. But here, too, as so often, aspiration and reality diverge.
In Germany, the traditionally largest subindex covers housing, water, electricity, gas and other fuels (subindex 4). It has always accounted for more than 21% of the overall index since the mid-1990s. Between 2020 and 2022, the weight had increased to slightly more than 25%. The official statistics thus assumed that German households spend on average around a quarter of their total expenditure on goods of this category. This is too little in the eyes of some critics. Many households spend significantly more on goods of this type. In larger urban areas, households often spend more than a third of their income on rent alone.
There has now been an unexpected change in 2023. The Federal Statistical Offices did not increase the weight of subindex 4, but lowered it from 25.2% in the previous year to 16.5%. No valid justification for this has yet been provided. On the website of the Federal Statistical Offices, there are only empty phrases: "The Corona pandemic, which has been prevalent since 2020, with its restrictions on public life and the resulting consequences, makes it necessary to change the usual procedure for updating the goods weights for the third year in a row as well." (translated with DeepL because AI is really good at translating bureaucratic talk.)
How could one even justify such an implausible adjustment? As a matter of fact, the adjustment means that from now on official statistics will assume that the average German household spends only 16.5% of its total expenditure on housing, water, electricity, gas and other fuels. Whether this assumption is realistic is something everyone can consider for themselves.
What is clear is that the down-weighted subindex 4 has been showing above-average inflation rates for some time now. Between 1996 and 2022, it has risen by 84% overall, but the HICP as a whole has risen by only 59%. Only subindex 2 for alcoholic beverages, tobacco and narcotics has risen even more strongly during this period, by 115%.
During the inflationary phase of last year, prices in subindex 4 rose the most of all. The inflation rate here was 13.9%, more than 5 percentage points above the official average inflation. That the Federal Statistical Offices have now decided to lower the weight of this subindex has one practical effect: the officially measured inflation will be lower. But it measures past reality.
These hot, lazy days of summer have investors lulled to a comfortable slumber with a foot firmly on the gas pedal. The July 25th Almost Daily Grant’s reported that BofA strategists, going all the way back to 2008, determined that “it has never cost less to protect against an S&P 500 drawdown of 5% or more over the next 12 months, as higher rates and low implied volatility and correlations have presented ‘a historic entry point for hedges.’” The folks at BofA also emphasized that market doomsday insurance is even cheaper than in 2017, when “several records for complacency, including the lowest VIX in history,” were established.
Mark Spitznagel and his crew of traders at Universa Investments are likely buying this cheap insurance with both hands, with the intent to cash in with the stock market’s next cratering. Spitznagel and his collaborator, the much more public Nassim Nicholas Taleb are the subjects of Scott Patterson’s Chaos Kings: How Wall Street Traders Make Billions In The New Age Of Crisis.
Spitznagel is well known in Austrian economics circles as a fan of the free market school and critic of central bank intervention. His 2009 piece in the Wall Street Journal, began “Ludwig von Mises was snubbed by economists world-wide as he warned of a credit crisis in the 1920s. We ignore the great Austrian at our peril today.” Also, his book The Dao of Capital contained plenty of what Patterson calls “Austrian diversions.”
Taleb is a best selling author of books such as The Black Swan and AntiFragile. He recently appeared on CNBC’s Squawk Box predicting a crash. Although he did say and never claims he knows exactly when the crash is coming. He did recommend avoiding real estate and AI-related stocks.
Patterson weaves together a very readable story of how Taleb and Spitznagel met and the frustrations of selling tail-risk hedging to a Wall Street that held the collective belief of Modern Portfolio Theory, diversification of high and low risk investments in a portfolio provides protection from an unknown market calamity. Buying deep out-of-the-money puts (right to sell at a certain price before a certain date) on exchanges is frustration drawn out for years in most cases. The puts expire worthless and Spitznagel must have the fortitude to continue implementing what is the vast majority of the time a money-losing strategy. But, when the crashes come, the returns are enormous. Meanwhile, “Universa traders found the job hard and often tedious. Coming in every day–and losing money–for years.” (emphasis original)
There are exciting episodes in the book chronicling Spitznagel’s group trading in a frenzy to cash on, for instance the 2010 Flash Crash. Universa booked a $1 billion gain on the crash which lasted a half an hour. The story of pension behemoth CalPERS terminating Universa’s tail-risk hedge in January 2020, just prior to the COVID market meltdown in March, which would have provided the California pension fund a 4,144 percent return will make CalPERS members pull their hair out.
But while the theme of the book is the future is unknowable and becoming more so, Patterson’s story wanders into Taleb’s pandemic, environmental and future of democracy predictions for a good share of the book. For Taleb fans, Patterson provides plenty of the iconclast’s views. An epidemic is the greatest risk to mankind according to Taleb. And forecasting the future is the biggest mistake people make in managing risk. Exposure and sensitivity to extreme events are what matters.
Taleb points out that the human brain craves order and “so we impose patterns, structures, fragile frameworks onto a world constantly roiled in chaos,” writes Patterson. Taleb wrote in The Black Swan, “The more you summarize the more order you put in, the less randomness. Hence the same condition that makes us simplify pushes us to think that the world is less random than it actually is.” (emphasis original)
Sure to annoy some liberty-loving readers is a quote of Taleb’s from twitter about the government’s response to COVID. “Libertarians’ are…incoherent,” Taleb wrote in May 2020, “they deny stores the right to require masks & constrain their freedom yet ask for freedom… Nothing to do with libertarianism: rather a collection of marshmallowbrained psychopaths and misfits taking their hatred of humanity too far.” Whoa.
Near the conclusion Patterson writes that by late 2022 Universa was providing crash protection for $20 billion in assets. The highest in its history. With the markets screaming higher this year more protection is needed, but there are those like the gentleman running CalPERS in 2020 who must learn the hard way.
It seems Powerball has lost its zip. The Wall Street Journal reports, “There were $152 million in nationwide sales for Saturday’s $829 million jackpot—a 25% decline from the $197 million in sales for another $825 million Powerball drawing on Oct. 29, 2022, according to Lottoreport.com, which tracks sales.”
The WSJ found an economist to weigh in with some words of wisdom: “'Everyone’s like, well, seen that, done that,' says Victor Matheson, an economist at the College of the Holy Cross who studies lotteries. 'Or, the more I play these billion-dollar jackpots, the more I realize that I’ve just thrown $2 away every time because I never win.'"
Really, suddenly the collective math and reasoning skills of lottery players has improved by 25%?
Another economist who studies lotteries (at least two too many that we know of) says people are just tired. Drawings have been increased from two to now three days and, “The added day has contributed to a degree of fatigue, " said Kent Grote, an economist at Lake Forest College, who has studied state lotteries.
We’re to believe trudging to the corner convenience store for Powerball tickets in Professor Grote’s mind is the equivalent of the Bataan March.
The WSJ’s Anthony De Leon wrote that the Federal Reserve inflated jackpots with its rate hiking. The prize is based on the value of the money’s investment in a portfolio of bonds over 30 years. A $1 billion jackpot translates to $516.8 million before taxes should the winner choose the lump sum instead of receiving 30 years of annual payments.
The Hill.com reported in April, the U.S. government had collected 35% less in tax revenue this year than at the same time in 2022, citing a recent analysis released by Moody’s Analytics economists Mark Zandi and Bernard Yaros.
At the time, Zandi said receipts are “coming even weaker than” anticipated. They still are.
Jeffrey Snider posted a chart on twitter reflecting weak collections in May and June. Weak tax receipts reflect weak income.
Perhaps Powerball players are simply too broke to play.
Last week's decision by the Federal Reserve to pause on interest rates left many unanswered questions, despite reporters raising them during the Q & A session. While the average person may be skeptical that the Fed can control inflation by simply raising interest rates, it’s still a position the Fed holds onto dearly.
The problem is that Chair Powell cannot reconcile the discrepancy between (price) inflation readings surpassing the 2% target and the decision to halt rate increases to “fight inflation.”
Using their own data, he confirmed:
In May, the 12-month change in the Consumer Price Index came in at 4.0 percent, and the change in the core CPI was 5.3 percent … Nonetheless, inflation pressures continue to run high and the process of getting inflation back down to 2 percent has a long way to go.
And eventually, he went on to say:
Inflation has not really moved down. It has it is not so far reacted much to our to our existing rate hikes. And so we're going have to keep at it.
Much can be said about the futility of doing the same thing over and over again and expecting different results. In the Fed’s case, it’s the hope that the rate hikes which began last year will somehow work this year and beyond.
The Fed's decision to pause rates triggered a wave of reasonable inquiries, such as:
I'm curious what gives you and the Committee the confidence that waiting will not be counterproductive at a time when the monthly pace of core inflation is still so elevated?
Followed by another reporter who asked:
… what's the value in pausing and signaling future hikes versus just hiking? … So why not just rip off the Band-Aid and raise rates today?
The Chair’s responses to these questions lacked clarity. On one occasion, he said the focus was on "determining the extent of additional policy firming," while at other times, it became a matter of speed, saying "it's common sense to go a little slower" in the current circumstances.
Nonetheless, where he struggled to articulate the process, he excelled in explaining the outcome, showing strong conviction, and providing assurances that everything will turn out fine. In his own words:
But we have to get inflation out of 2 percent, and we will.
Reiterating to the world:
… we're committed to getting inflation down. And that's the number one thing.
As far as policy is concerned:
At the same time, our main focus has to be on getting the policy right. And that's, that's what we're doing here and that's what we'll do for the upcoming meetings.
Powell's tough sell came to an end, marked by the customary evasion of the real issues and the promise of further data review and deliberations. All of this is aimed at reassuring us everything will be fine because the appropriate policy will be implemented. However, the details of how this works remain unclear, placing significant reliance on both public trust and ignorance.
While the Fed maintains that the current stance is a temporary pause, followed by rate hikes, it is worth remembering that neither a pause nor a hike will carry much weight once rate cuts make a comeback in the not-too-distant future.
The formal recession has yet to be declared, and Powell is already offering apologies. Following last week's rate hike amid the ongoing banking turmoil, during the Q & A session, the Fed Chair offered a sort of apology for recent events:
… I've been Chair of the Board for five plus years now, and I fully recognize that we made mistakes. I think we've learned some new things, as well, and we need to do better.
Herein lies just one of the features of the system: it demands expertise to accomplish the impossible, be it an unworkable calculation or striving to obtain unattainable knowledge. Powell and the Fed not only fail to achieve their intended goals but also exacerbate the situation through their meddling in the market.
Given that the problem is inherent to the existence of both the Fed and the fractional reserve banking system, and since a significant part of the issue revolves around customer bank withdrawals, other than lending more money to banks, there are few viable solutions the Fed could do to prevent a banking crisis. Powell doesn’t provide many recommendations beyond apologizing and promising a better future.
He continues to rely on hope as a guide, but his words don’t exude confidence:
So I think that -- I think it's still possible. I -- you know, I think, you know, the case of avoiding a recession is, in my view, more likely than that of having a recession. But it's not -- it's not that the case of having a recession is -- I don't rule that out, either. It's possible that we will have what I hope would be a mild recession.
More hope is offered as a viable alternative to sound economic advice, as seen by the never-ending quest to bring (price) inflation metrics back down to 2 percent. According to the Chair:
We have a goal of getting to 2 percent. We think it's going to take some time. We don't think it'll be a smooth process. And, you know, I think we're going to - - we're going to need to stay at this for a while.
And so, the notion of implementing rate cuts is easily dismissed:
So we -- on the Committee, have a view that inflation is going to come down, not so quickly, but it'll take some time. And in that world, if that forecast is broadly right, it would not be appropriate to cut rates, and we won't cut rates.
Beyond his optimistic forecasts, he also commented on the issue of the debt ceiling, even though it falls outside of his job description:
I would just say this: It's essential that the debt ceiling be raised in a timely way so that the US government can pay all of its bills when they're due.
It’s worth noting that raising the debt ceiling effectively undermines the purpose of having a debt ceiling in the first place, yet this is often overlooked by central planners.
With a new banking crisis almost every week, Powell's optimism about a brighter future seems increasingly disconnected from reality. For now, pursuing the inflation target remains a top priority, so the idea of rate cuts is still not on the table. However, we must keep in mind that priorities can and will change at a moment’s notice. Making an apology this early doesn’t bode well, and we should expect many mistakes and apologies to come.
Everyone is blaming Jerome Powell for something these days, like the stock market selloff that followed the Fed Chair’s testimony to Congress this week. But do these critiques suffer from a lack of depth? On Wednesday, Fortune published an article showing how mainstream academics view the Fed. Various quotes foreshadow what the general public is up against, starting with the headline:
‘It really shouldn’t be this way’: Top economist Mohamed El-Erian blames the Fed for bad messaging and stock volatility
According to Fortune, this “top economist,” was quoted saying:
Yet once again remarks by Federal Reserve Chair Jerome Powell fueled considerable volatility in markets that could risk both economic well-being and financial stability.
Rather than overwhelmingly pricing in an increase of 25 basis points as previously signaled by the Fed, the markets moved the odds in favor of 50 points, which would reverse the downward shift in hikes the central bank prematurely made just a month ago.
More experts are cited. According to the head of Citadel, Ken Griffin:
The variance of the message over the last couple of weeks has been incredibly counterproductive.
The article’s author also gives a fool's hope to coming out of this crisis without a recession, thanks to remarks made by the Fed:
Historic data also points to how recessions have rarely been avoided after interest rates touched levels as high as they are currently. It’s possible that the Fed defies that, according to Philip Jefferson, a member of the Fed’s Board of Governors.
Per the Governor, “the current situation is different” because now we have:
… supply chain disruptions, a drop in the number of people working or seeking jobs, the Fed’s increased credibility to fight inflation, and its concerted efforts to reign in on high inflation rates.
One of the problems is that taking economic advice from a mainstream economist, a billionaire hedge fund manager, and a Fed board of governor is akin to writing a research paper about an experimental drug funded by a drug company; one should be wary of bias. These three individuals all have a strong vested interest in keeping the current central banking system running for as long as possible.
The comments made by El-Erian are highly superficial, and ignore the inherent problem, the Fed's very existence, and its ability to move markets with just one policy decision or even just a simple comment. At best, mainstream economists will talk about the Fed hiking rates too slowly, or too little too late, but they’ll never talk about the Fed being the culprit behind the depreciating currency, destruction of price signals, or how it benefits the rich over the poor.
As for Ken Griffin whose net worth fluctuates on a daily basis in and around $32 billion, it's safe to say his primary concern when it comes to central bankers is their ability to help his portfolio. His life has undoubtedly been enhanced due to the Fed’s easy money policies.
Meanwhile Governor Jefferson is likely compromised since he is literally on the Fed’s payroll, and the Fed doesn’t care much for intellectual diversity. His supply chain argument ignores disruptions due to the increase in the supply of money and credit. Plus, it’s now several years since lockdowns. Blaming the labor market also could use more depth, but they’ve hardly gone into this. Lastly, his notion that the Fed has more credibility now and is also more concerned with fighting inflation is a terrible slight since it diminishes the credibility of his predecessors.
Mainstream media falls under the same State apparatus who cares little for a voting age population who understands economics, central banking, currency debasement, nor how the Fed causes the problems it claims to solve. Ultimately, Powell testified to Congress, then a few wealthy and powerful people levied superficial shots. Nothing meaningful was shared to the public since no one at the top wants to do what needs to be done: Stop the Fed once and for all.
The Great Depression was forced by 8 years of 7.8 percent average annual True Money Supply increases; Great Inflation I, by 18 years of 9.9 percent increases; the Financial Crisis, by 12 years of 11.0 percent increases. By April 2022, Great Inflation II had already been forced by 14 years of astounding 22.2 percent increases.
Now the outgoing congress has grabbed control of spending from December 24, 2022, through September 30, 2023. A full 4,155 pages of executive funding decisions were drafted in secret by a logrolling legislative committee, passed without meaningful debate by legislative majorities, and signed by the acting president. Of the outgoing senate’s Republicans, the yes votes totaled 36 percent and the non-votes totaled another 6 percent.
This logrolling isn’t constitutional. The executive power includes the power to set line-item priorities on how to best execute the laws. The legislative power only includes the power to set the overall total appropriation.
And this logrolling has devastating real-world costs. Legislators who vote for this logrolling, and executives who sign off on this logrolling, rob everyone who earns money and everyone who saves money.
Inflation must be stopped at its source
Great Inflation II won’t end until spending is slashed by politicians.
Executives’ duty is to only sign bills that they interpret to be constitutional, to only execute laws that they interpret to be constitutional, and to not execute the rest, removing these from spending. Candidates not currently holding an office should specify every law they would not execute.
Legislators’ duty is to only vote for those bills that they interpret to be constitutional, and to sponsor repeals of the rest, removing these from spending. Candidates not currently holding an office should specify every law they would sponsor a repeal bill on.
The Constitution makes its rules clear.
There must be no administrative agencies in any jurisdictions. Laws must provide every rule and sanction, must be passed by legislators and signed by executives, must be enforced by executives, and must have their cases opined on by judges.
There must be no violations of the national government’s enumerated powers. There is no power for any national-government criminal law other than on treason, on counterfeiting, and on the natural laws that bind national governments.
State and local governments must be of republican form, and this includes that their powers must be limited and enumerated. These governments should be out of schools, out of licensing, and out of zoning and permitting. They have criminal law to simplify and enforce, and that’s about it.
Politicians must compete to slash governments
When former president Donald Trump suggests that he would lay off the top managers, that action would at best just amount to hiring new managers, not slashing governments.
When Florida governor Ron DeSantis has signed increasing budgets, that hasn’t been slashing his government.
But when Representative Thomas Massie tried to force an on-the-record roll-call vote about the coronavirus stimulus, that was using his constitutional powers as fully as he could to slash governments.
Based on these politicians’ records to date, a competition between them wouldn’t even be close.
Inflation is an unconstitutional government power-grab—stealth taxation without representation.
Prospective 2024 candidates need to compete to slash unconstitutional government. Either current officeholders start slashing governments now and keep slashing governments, or we keep suffering until future officeholders start slashing governments eventually.
Constitutionalist candidates know this full well. They need to step forward and show how it’s done. If they’re defeated this time around, inflation will only continue, and as it does, their credibility will only grow.
Crises only ratchet up government when constitutionalists don’t step up, take risks, and take charge.
In the unfolding current crisis, voters are primed to support constitutionalists. If constitutionalists start stepping up—now—then instead of yet-another crisis getting leveraged to grow leviathan, this revolutionary time a crisis will again get leveraged to produce limited government.
We just concluded a national, state and county election season where crime and economic volatility were at the forefront. These issues are likely to occupy the minds of voters in municipal elections across the country this year.
Though economic stability is more important to public safety than it’s often given credit for, it’s not quite the deterrent as a perp knowing that the good guys can protect themselves. A recent altercation here in San Antonio is a good example.
While working in a smoke shop in my area of town, a clerk was confronted by a would-be thief who entered the store and hopped the counter. No doubt a startling turn of events, the clerk was ready.
The failed robber was later found wearing bullets from the clerk’s gunshot as change for the business he actually got at the store.
We Americans are blessed to have the human right to defend ourselves enshrined in the constitution. Guns are however, admittedly intimidating. There’s no playing around with them. As such, many people choose not to carry, or even own them, and that’s OK. That’s their prerogative.
But none of us should allow hypocritical politicians to pack heat, or have taxpayer-funded bodyguards, while they turn around and restrict how we protect ourselves. And it’s not only that we’re protecting, but also our freedom.
That’s a notion that has proven far more fragile in public officials’ hands in the last few years than previously imaginable.
When we’re born, there’s a world of opportunity before us. Unfortunately, that starts to erode once we’re ready for kindergarten.
The vast majority of us are limited to one degree or another, to attending the closest K-12 schools that take our property taxes for funding. While wealthier families are able to eat that bill and send their kids to private schools, or homeschool them, too many of us are stuck in low-performing schools.
In adolescence, kids are then hindered from entering the workforce by measures like the minimum wage. An employer cannot afford their lack of marketable skills at the government-mandated rate. Therefore, the opportunity for young, prospective employees is delayed.
And that’s just one government impediment: employment taxes, mandated leave, favoritism shown to bigger competitors, etc. This reached a natural conclusion, in brutal fashion, with the lockdowns of recent years.
When we face this constant barrage of regulations and taxation, the cost of choosing a life of crime goes down. People may not think about it in those terms. However, when this way of life is ingrained almost from day one, how can they be expected to?
Many criminals are simply bad apples, but government creates its fair share, too.
More immediately problematic is making the cost of actually committing a crime lower. That is the effect some portions of “cite & release” programs have.
Imagine two children playing with their toys. one walks over to the other and snatches a doll out of her hand. The parent responds in one of two ways: the aggressor gets a “verbal warning,” or is put in a corner after being scolded.
Which reaction is more likely to result in a repeat offense, and which one is more likely to end up with better behavior?
Stealing a few hundred dollars’ worth of merchandise, or running off without paying computer repair, shouldn’t result in the same penalties as assault, murder, etc. But when the perpetrator spends no time behind bars or is not compelled to make his victim whole again, we’re likely to see more aggressions.
Even if such policies persist, we should give more thought to simply increasing law enforcement.
A lean police force
A key to any peaceful, prosperous society is an enforceable rule of law, and the protection of property rights. A disciplined police force has a part to play.
A police presence gives many citizens, regardless of demographic, peace of mind. It allows them to go about their business, engage with others socially and/or commercially. When and if things go sideways however, we’re our own first line of defense (see above).
Ideally, the police are there to deescalate and investigate. It’s important here to remember that they are under no constitutional duty to protect us. The events in Uvalde were a stark reminder of this.
That’s just one reason we should be cautious when calling for more police officers, especially when some police chiefs say they’re well-staffed already.
Moreover, to the extent that opposition to (recent) council policies exists, do we want greater enforcement of them? As pro-government forces fatten the budget, milk the taxpayer and expand the city’s reach, do we want to contribute to and enable that?
Like the citizenry they serve, most police officers are solid folks. What happens though, when they’re replaced by more “mental health” officers? We’d end up living out the movie “Demolition Man,” with future governments putting the muscle behind tax collection to they make sure to get theirs.
In a way, this implicitly signals surrender on trying to correct criminal behavior at its source.
We do our best by our kids. We rightfully see them as an opportunity to make society better. We correct bad behaviors. We educate them. We make sure they’re respectful.
It’s inevitable however, that some tragically fall through the cracks, and are then more likely to veer off onto the wrong side of the tracks. This is where we have an opportunity to step up.
Mentoring or fostering kids can make a difference. Some heroes go so far as to navigate the adoption process thicket to give kids in troubled circumstances a new life. It doesn’t even have to go that far.
Some families with a gaggle of their own to look after have an open-door policy where their kids’ friends can come and go almost at will. If these friends have issues they’re trying to escape from, a welcoming, harmonious household can show them the possibilities and offer hope.
We need to start digging deeper to radiate that harmony more broadly, rather than deal with the predictable outcome of giving policymakers more power.
The average price of eggs increased by 49%, butter/margarine by 34% year-over-year, CNBC reported as of November. Yet, with his first speech of the year, Federal Reserve Chair Jerome Powell addressed the issue of the Fed’s independence. Yes, the conference was on Central Bank independence. But how many Americans have any concern, or the slightest care for this?
At a conference in Sweden, Powell made his case using an appeal to democracy:
With independence comes the responsibility to provide the transparency that enables effective oversight by Congress, which, in turn, supports the Fed's democratic legitimacy.
Strange that one of the country's most opaque (and possibly most unconstitutional) organizations speaks about both transparency and democratic legitimacy; but once the propagandists commit to Orwellian leaps of the absurd, they must never deviate from the narrative.
Normally, talk about Fed independence centers around being independent from Congress. It was Congress who was tasked by the constitution to handle monetary affairs of the country; it was also Congress who essentially outsourced the task to the Fed. However, Powell somewhat deviated from script when speaking about Fed independence in relation to the banking system.
In the area of bank regulation, too, the Fed has a degree of independence, as do the other federal bank regulators. Independence in this area helps ensure that the public can be confident that our supervisory decisions are not influenced by political considerations.
It’s an odd relationship. I frequently express how peculiar it is that the Fed is tasked with regulating the banking system while simultaneously paying an annual dividend to the very banks it regulates. In addition to the payout of very (normally) large profits, the Fed acts as the “lender of last resort,” creating money to buy bonds when it chooses, bails out wall street, pays interest on bank reserves held at the Fed, conducts repo/reverse repo operations, carrying out all sorts of tactics to keep the banking sector afloat.
No other industry is supported like the banking industry. The existence of the Fed allows banks to take on tremendous amounts of risk, knowing the Fed will protect the downside. In other words: privatize profits and socialize losses; one of the many reasons those who long for a free and fair society are against the Fed.
And so, in addition to lack of transparency, the Fed has an independence problem, whether from Congress or the banking sector. If there was something to agree with him yesterday, it would be that the Fed should not use its monetary powers to tackle climate change. Unfortunately, his stance on not being a “climate policymaker” is not without caveats. Powell tells us:
Decisions about policies to directly address climate change should be made by the elected branches of government and thus reflect the public's will as expressed through elections.
… if it wasn’t clear:
But without explicit congressional legislation, it would be inappropriate for us to use our monetary policy or supervisory tools to promote a greener economy or to achieve other climate-based goals.
Was he giving a wink to Congress?
The moment Congress gives the Fed explicit direction to fight climate change is the moment it becomes appropriate to use the Fed’s monetary firepower to fight the war on climate change. As the democratic process affords, this would be okay if the public, via the electoral process, expressed enough interest on the topic.
It all invokes an interesting conclusion which illustrates the myth of Fed independence. It’s Congress (backed by wealthy individuals) who allows the Fed to exist. The Fed can only serve as a tool to protect special interests (i.e. the same wealthy individuals); and the Fed would never end itself anymore than Congress would. It’s a messy affair! But the Fed, Congress and the current banking system are inextricably linked, and by their very nature go against the public’s interest.