Power & Market
Banking Crisis (Not the Fed) To Cause Recession?
One of the most dishonest headlines of the week goes to CNBC:
Fed expects banking crisis to cause a recession this year, minutes show
CNBC absolves themselves by citing that this was said in the Fed minutes, yet it does raise some interesting considerations, the idea that the upcoming recession will be due to a banking crisis.
Market contacts observed that the recent developments in the banking system will likely result in a pullback in bank lending, which would not be reflected in most common financial conditions indexes.
How much a bank “should” lend is anyone’s guess, but with rates on the rise and the Fed’s Quantitative Tightening of last year, it’s understandable lending activity would decrease. Anecdotally, other than mortgage loans, small business owners can attest that banks haven’t been lending to main street for a long time, save for government backed programs.
The Fed continues to place fault on the banking sector, as explained:
Given their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years.
An irreconcilable turn follows, with the prediction that:
In 2024 and 2025, both total and core PCE price inflation were expected to be near 2 percent.
On one hand the Fed thinks a recession will happen this year, with a recovery to happen in 2024 and 2025, but on the other hand, inflation will remain at 2% during this time.
Unfortunately, last month gave the world a glimpse of what is to come in the next recovery. It happened fairly quickly, but over the course of one week in March, the Fed expanded its balance sheet by $300 billion, and then $100 billion the following week.
If the Fed created a few hundred billion dollars to save a few troubled banks, imagine the response they’ll give once larger banks fall on hard times. Even worse, should the banking crisis be only a small part of the problem, the Fed’s desire to intervene will be even greater. And never forget that $5 trillion was required to fix the last crisis; they’ve given us nothing to believe that next time will be different.
No one knows how bad it will get, and how large the Fed response will be, but don’t expect a mild response any more than a soft landing. The March monetary inflation event reaffirmed this. Nonetheless, the meeting closes.
Members concurred that the U.S. banking system is sound and resilient.
And so, members of the Fed’s inner circle deem the banking system both sound and resilient but warn that a banking failure is ahead. They expect a recession this year and 2% inflation during the period of recovery. While they’re not wrong about the upcoming recession, they might be overly optimistic about their response to the recession. All they have is the ability to print more money and lower rates, so it’s difficult to imagine "low" inflation during any alleged recovery. Lucky for the Fed, they’ll suffer no adverse consequences for their actions because according to them, the crisis won’t be their fault.
Bracket Creep: Delaware’s Hidden Income Tax
The recent acceleration of inflation in the U.S. has undoubtedly caused most Delawareans to see the difference between nominal or money income and real income or what their income actually buys. The loss in purchasing power of Delaware households because of inflation is compounded by the fact that Delaware, like several other states, has a progressive income tax and doesn’t adjust its income tax brackets for inflation.
Delaware’s income tax brackets have remained the same since 1999. So, when nominal household incomes rise, those incomes are taxed at higher rates. This in turn results in lower disposable household incomes. This phenomenon is referred to as “bracket creep.” The loss in real income or purchasing power because of bracket creep is in addition to any loss in real income that results if the rate of inflation exceeds the increase in nominal income.
In this essay, I examine the extent of bracket creep in Delaware between 1999 and 2019 and then review the implications of this bracket creep. Figure 1 shows the change in the price level as measured by the U.S. Consumer Price Index (CPI), the mean Delaware Adjusted Gross Income (MEAN AGI), and the revenue generated by the Delaware income tax (Tax Revenue) for the period 1999-2019. All variables are index values expressed as percentages of their respective 1999 values.
The data in Figure 1 indicate that the mean adjusted gross income over the period 1999-2019 increased at an annual rate of 1.79 percent or by 45 percent over the entire period. This was less than the rise in the consumer price index which increased at an annual rate of 2.06 percent or by 53 percent over the entire period. Hence, the mean adjusted gross income failed to keep up with inflation, resulting in a loss in the purchasing power of Delaware taxpayers.
This loss in purchasing power was further diminished by the increase in personal income tax rates as households were pushed into higher tax brackets by inflation. While the real average adjusted gross income of Delaware households declined over the period, the tax revenue generated by the personal income tax increased by an average annual rate of 3.31 percent and nearly doubled over the period 1999-2019. In other words, the state of Delaware was able to nearly double its revenue from the income tax without legislating any tax increases.
Sources: Data for the mean adjusted income (Mean AGI) are from the Federal Reserve Bank of St. Louis. Data for the Consumer Price Index are annual data for all urban consumers and are from the Bureau of Labor Statistics and data for the tax revenue are from the Delaware Division of Revenue.
Table 1 shows the impact that adjusting the tax brackets annually for inflation would have had on the tax liability of households with varying levels of taxable income for the year 2019. Column 4 of the table denotes the percentage by which the tax liability for households with varying levels of taxable income would have declined in 2019 if the tax brackets had been adjusted for inflation.
Table 1. Comparison of 2019 Tax Liabilities Under Current and Adjusted Tax Brackets
Current Tax Bracket
Adjusted Tax Bracket
The data in table 1 clearly indicate that the failure to adjust tax brackets for inflation results in lower after-tax incomes for households at all levels of income. However, the most adverse effects are felt by households which had incomes of $30,000 or less in 2019.
Bracket creep creates a number of problems. First, it results in a loss in the purchasing power of taxpayers which reduces the amount of income available for savings and capital investment in the private sector. As the Austrian economist Ludwig von Mises noted "progressive taxation of income and profits means that precisely those parts of the income which people would have saved and invested are taxed away." This in turn leads to a decline in the rate of economic growth and a lower standard of living for future generations.
In addition, bracket creep requires taxpayers to pay a higher percentage of their incomes in taxes without requiring any action by the state. Instead of forthrightly increasing taxes, the state relies on inflation to push households into higher tax brackets in order to increase tax revenue and the size of government. As Thorndike noted bracket creep is “a convenient way to raise more revenue—painful for the hapless taxpayers but painless for the gutless lawmakers.”
Higher income tax rates also incentivize higher income individuals and households to migrate to lower tax states. In fact, an increasing number of states are lowering or eliminating their income taxes to stem out-migration and spur in-migration and economic growth.
Finally, since higher income households are already in the highest tax bracket, bracket creep tends to make the after-tax income distribution more unequal as lower income households are pushed into higher tax brackets over time. It also discourages less skilled lower income workers from entering the workforce, resulting in lower labor force participation rates. This negative effect is particularly important for a state like Delaware because of its relatively low labor force participation rate. Delaware’s labor force participation rate of 60.2 percent in December of 2022 was in the lowest quartile of U.S. states. Given this, It behooves Delaware to look for ways to incentivize, not disincentivize, higher labor force participation rates.
It's time for Delaware to adjust its income tax brackets for inflation each year to prevent the negative consequences of bracket creep. If the executive and legislative branches of Delaware’s government want to take more of the taxpayers’ money, they should be required to do so by transparently raising tax rates. This is not such a novel concept. Even the U.S. Congress recognized how deceitful the use of bracket creep was as a means of raising revenue. As a result, in 1981, it voted to pass President Reagan’s Economic Recovery Tax Act which included a provision to adjust tax brackets for inflation.
Bank Busts Lead to Sweetheart Deals
Amidst the wreckage of bank failure grow lucrative deals. Shares of New York Community Bank Inc. surged with the announcement that the FDIC had made NYCB a “sweetheart deal” as the deposit insurer “priced the assets to move quickly,” wrote Wedbush analyst David Chiaverini in his upgrade of the stock, as reported in Bloomberg. “In exchange for the $2.7 billion discount on acquired loans [assets], plus the interest income earned on the loans and securities, NYCB will give up only $300 million in equity appreciation rights to the FDIC,” added the Wedbush analyst.
Plus, the takeover didn't include Signature's $4 billion in crypto-related deposits, included all of Signature's branches, and some of its loan portfolio, reports Business Insider. Emphasis was added because Signature didn’t have to take any bad loans.
"With New York Community's addition of certain deposits and assets of Signature's Bridge Bank, NYCB's balance sheet could be improved with less reliance on higher-cost wholesale funding. NYCB's loan-to-deposit ratio should decline from a high 119% in Q4 with the assumption of Signature deposits, while $12.9B in loans were bought for $2.7B, which equates to a 79% haircut," Bloomberg Intelligence analyst Herman Chan commented.
The FDIC killed two birds with one stone with the move, moving cherry-picked assets and deposits from a failed bank (Signature) to one that was overleveraged (119% loan-to-deposits) and possibly headed for trouble (NYCB).
Of course, sweetheart deals are nothing new. Post the 2008 crash, Rialto (a division of homebuilder Lennar) bought a 40 percent share of $1.2 billion in loans from failed banks for 40 cents on the dollar, with the FDIC carrying a loan for $1 billion of the deal at zero interest for seven years.
This was called a partnership, however, when a government entity carries its partner’s share at zero percent interest for seven years that term doesn’t seem to apply. The RE Action Committee explained at the time:
Lennar (Rialto) acquired indirectly 40% managing member interests in the limited liability companies created to hold the loans for approximately $243 million (net of working capital and transaction costs), including up to $5 million to be contributed by the Rialto management team. The FDIC is retaining the remaining 60% equity interest and is providing $627 million of non-recourse financing at 0% interest for 7 years. The transactions include approximately 5,500 distressed residential and commercial real estate loans from 22 failed bank receiverships.
Attorney Bryan Knight, in 2011, called the Private-Public Investment Programs (“PPIP’s”), such as Lennar/Rialto “ the biggest waste of government spending and most damaging program to the American public.”
Rialto was given a $600 Million interest free non recourse loan by the Federal Government to purchase assets of failed banks. Therefore, Rialto has no risk in collecting on assets because no interest is accruing and Rialto is not liable to pay back the loan since the loan is a non-recourse. This gives Rialto even more incentive to refuse loan workouts and to collect asset management fees. It is not rocket science, a bank that has risk of taking a loss is more likely to work with a borrower. Here Rialto has no risk.
How the FDIC hands out favors is described perfectly by Patrick Newman in his book Cronyism writing:
Cronyism [is] when the government passes policies to benefit special-interest politicians, bureaucrats, businesses, and other groups at the expense of the public.
The rewards of cronyism take the form of monetary gains, particularly increased incomes and profits for individuals and businesses, or psychic gains from greater power and authority.
The case of Silicon Valley Bank is especially egregious cronyism. Joseph Wang, the CIO at Monetary Macro who previously was a senior trader on the Fed’s open markets desk told Roger Hirst on Real Vision:
So, the bailout of Silicon Valley Bank was, in a sense, the bailout of millionaires and billionaires who weren't the clientele of Silicon Valley Bank. Those are guys who mismanaged your cash badly and wanted to bail out. Now, if you were going by the rule of law, you'd say that yeah, you guys. You can take it, and these are the rules. But these guys were also politically connected and very loud in social media and in the press. And so, they have influence and they can, I guess, encourage the government to bend the rules in their favor.
Winston Churchill and later Rahm Emmanuel famously said “Never let a crisis go to waste.” Cronyism never does.
That was fast! While Lael Brainard has been on the Federal Reserve Board since 2014, she’s only held the position of Vice Chair since last May. Her Valentine’s Day resignation was quite surprising.
Most people would be unfamiliar with her. Only those who take interest in the Fed’s affairs could recognize her, and even those people, like myself, would be hard pressed to narrow down her significant accomplishments.
Luckily Fed Chair Jerome Powell shared some of her contributions:
Lael has brought formidable talent and superb results to everything she has done at the Federal Reserve.
Sounds impressive… but surely there’s substance:
That lengthy list includes her thought leadership on monetary policy and economic research, her stewardship of financial stability and the payments system, strengthening the financial system both domestically and globally, and helping to manage the immense operational agency challenges during the pandemic.
Not much has been cited. This is not to pick on Lael, but it speaks to the entire Federal Reserve System. It’s run by the Board of Governors who deliberate monetary policy for the stated reason of protecting the nation as a whole, but in reality it is to protect the interests of existing power structures in society. The cost of this is astounding! The 2021 financials reveal Board of Governors operating expenses and currency costs amounted to $2.005 billion.
No details have ever been provided as to what the Board of Governors does with all this money. One would think there would be something to show for their efforts.
It’s an expensive catch-22. The Fed has a profound impact on the economy, with the ability to legally counterfeit currency and alter interest rates. Yet at the same time, anyone could do the job as a member of the Board of Governors so long as they stick to the script. It is why Judy Shelton never got appointed. Judy was far too vocal and they would never be able to fully trust her to fully commit to their Monetary Machination Techniques.
No hidden knowledge, data interpretation, historical understanding, or any acknowledgment of economic theory is required; the job runs itself. The playbook can be simplified: Expand the money supply/lower rates, cause the boom. The bust will happen regardless; but to exacerbate things, the Fed can decrease the money supply/increase rates. Once a bank goes bankrupt, a housing crisis sets in, or any other calamity occurs, the Fed will claim to solve the crisis by once again expanding the money supply and lowering rates, setting in motion the next bust.
Anyone could be a member of the Fed’s inner circle, so long as they can depend on you to do the only thing they know how to do: stick to a perpetual policy of inflation.
If there’s anything to remember from Brainard’s tenure at the Fed, it’s this quote from a paper she wrote in in 2022 called Bringing Down Inflation, reminding us:
We are in this for as long as it takes to get inflation down.
The beauty of these jobs is that one is allowed to say anything, including outlandish promises about the future, with little to no recourse. She can move on with her life to a new job that will offer a competitive salary, pension, and benefits, as all the havoc she and her co-workers unleashed will continue for a very long time. Meanwhile, millions of other adults must produce something society values in order to barely scrape by; it is the working poor who pay dearest for the Fed.
Brainard’s next role will be as Director of the National Economic Council where she’ll advise the Biden administration on economic policy. Looking at their statement of priorities they are focusing on:
… actions to control the COVID-19 pandemic, provide economic relief, tackle climate change, and advance racial equity and civil rights, as well as immediate actions to reform our immigration system and restore America’s standing in the world.
Brave New World Still Resonates with the Modern Reader
I’m rereading Brave New World as we’re kind of living in it. I loved it at school more and preferred it over 1984 because the characters were better developed, and the plot development more skillful, although each had a profound effect on me that has lasted throughout my life, and I often remember key scenes from each of them.
It’s amazingly perceptive, and replete with subtle meanings that are not explicitly stated. The masses of society participate meaningless activities with outpourings of emotions. One of the characters sees it for what it is and seethes with resentment at people objectifying one another as well as their lack of ability – or willingness – to critically examine the meaningless mantras that they repeat which form the social norms of their society.
However, the fact that he can see through the emptiness of his culture does not make him immune to the excruciating pain of being an outsider with no one to connect with. And it doesn’t stop his natural attraction to women, nor the pain of rejection that comes with it. At one point, feeling inadequate, he wants to assets himself to a friend, and mentions that he has a date with Lenina, a desirable woman. But his friend is tall and important and responds with, “Oh, good for you,” because he’s got girls throwing themselves at him for group sex in the park by virtue of his social status.
Perhaps you see yourself reflected in Brave New World, if you are a critic of the Covid regime, or mainstream politics, or what passes for economics these days. Knowing you have right on your side but feeling the clawing of the outsider.
The novel does not only capture the shallowness of society (“degeneracy” as is commonly now referred online) but how cruel it is to those who see through it, having nowhere to turn. It demonstrates how the carrot of worldly success and verbal rewards for conformity is underwritten by the stick of social rejection - encompassing exclusion from dating - pitting man against himself in an internal battle between the love of the truth as he sees it and the desire to experience communion and be one with his tribe.
Biden Declares "MAGA Republicans" Enemies of the State
Last night Joe Biden was propped up behind the presidential seal in front of historic Independence Hall and gave the most provocative and divisive speech in modern American history. With the site of the signing of the Declaration of Independence cloaked in an ominous blood red, Biden sputtered his way through an attack on “insurrectionists” he labeled as threatening American democracy, political norms, and the rule of law.
The optics of the event were likely the idea of a proud Biden staffer, fresh off receiving a $10,000 subsidy to their student loan debt, leaning into the “Dark Brandon” aesthetic that has become popular among regime loyalists on Twitter. To Americans outside of this Very Online echo chamber, the imagery drew connotations of sinister authoritarian regimes ranging as Nazi Germany, the Empire of Star Wars, or the fascist regime of V for Vendetta.
The substance of the speech supported these comparisons. It was the display of a weak regime projecting strength at a time of mass unpopularity and rising polling numbers of political opponents in pivotal midterm elections.
None of this is a surprise.
As I noted after the chaotic 2020 election, the federal government faced a threat it has not seen in over a hundred years. Concerns over the integrity of the 2020 election struck at the core of the institution’s democratic legitimacy. The result was a Biden inauguration fortified with thousands of national guard members that the Democrat Party didn’t trust with ammunition.
The path the Biden administration took could have gone one of two ways. The regime could have fallen back on the power of moderation, restoring the isolated Washington uniparty by staffing the executive branch with prominent Republicans who always preferred the Clintons and Bidens over Trump—even if the smart ones refused to say so explicitly—while pursuing a standard policy agenda of foreign intervention, reckless spending, and fortifying the supremacy of the federal government over state control. These policies would have continued American decline but could have served to lull Americans to pre-Trump apathy by reminding them that federal elections have no real consequences for Washington.
Instead, the Biden regime doubled down on the excesses of the Obama era, attacking hot-button issues such as gun rights, tying state funding to public school promotion of child mutilation and sterilization, and leveraging their control over large corporations to censor political opponents and mandate covid vaccinations of employees. Along the way, they secured funding to increase, arm, and expand the scope of federal agencies—an Imperial Guard for Washington elites to remind red states who is truly in charge.
From the golf courses of Mar-a-Lago, the specter of Donald Trump continues to animate Capitol Hill. C-SPAN hearings over January 6 have been coordinated for prime-time viewing, while his supporters have been subjected to federal prosecution, solitary confinement, and financial ruin.
These concerns may be justified. Outside of Washington, “MAGA Republicans” have found success, particularly in the high-profile senate and governor races.
In Arizona, Blake Masters and Kari Lake conquered John McCain’s former state running on a platform against the 2020 election and the anarcho-tyranny of Biden-era policies while being viciously attacked by both the corporate press and establishment Republicans. In Ohio, Peter Theil–backed J.D. Vance leaned into opposition to American financing of the Ukrainian government while overcoming two more traditional Republican candidates. In Florida, Governor Ron DeSantis has secured the position as the only Republican with the popularity that rivals Trump by translating Trump-style rhetoric into aggressive state policy, with a particular focus on attacking the public health tyranny of the soon-to-debate Dr. Fauci.
A common theme of this new class of Republicans has been their explicit calls to stand against the “regime,” railing against Washington’s “administrative state,” and their interest in the intellectual works of “dissident right-wing thinkers.” They have been supported by a vocal group of MAGA House members, such as Marjorie Taylor Green, Matt Gaetz, Thomas Massie, and Lauren Boebert, who have seized on the overzealousness of the Biden administration to normalize calls to defund the FBI and other cherished Washington institutions.
The primary success of a potential new class of MAGA Senators has created new pressures for Mitch McConnell. Long established as the kingpin of beltway Republican politics, his criticism of the “quality” of candidates has earned him strong public rebukes from Florida Senator Rick Scott—a political figure with both the ambition and financial resources to threaten McConnell.
All of this is creating a unique moment in American history.
The overreach of the Biden administration has led to the dropping of the executive mask. No longer is there any pretense of governing all Americans—the notion of liberal persuasion is dead. Brute force and the abolishment of governing norms—such as the facade of a politically independent Supreme Court, state control of elections, or the role of the filibuster in the Senate—are now accepted by mainstream Democrats as necessary to usher in a modern version of reconstruction on the parts of America that still fly Trump flags.
Meanwhile, the most vocal anti-Trump Republicans have faced brutal defeats electorally but still have a home in the comfortable confines of Washington. While Liz Cheney’s blowout primary defeat means she will be giving up the pretense of representing Wyoming, she has been welcomed to the friendly confines of AEI. The View or CBS News are willing to welcome various former Trump administration figures so long as they engage in the public ritual of condemning their previous boss. The impact of these decisions, however, is declining interest in traditional conservative think tanks, respect for corporate media, and the legacy of formerly prominent Republican legislators and dynasties.
The regime’s most powerful tool—a federal uniparty that fights on Sunday News Shows but works together and socializes in the real world—is fraying fast.
Republican Congressional offices are being flooded with calls and emails attacking once noncontroversial issues such as foreign aid, the FBI, and the security of elections. While the wiliest of Washington creatures know how to pretend to sympathize with these concerns, the more mediocre ones flounder—with numerous Republican incumbents now forced to move their office from Capitol Hill to K Street.
The real question will be what comes after 2022. While the sulfur and brimstone tones spewing from Joe Biden may spark news cycles, economic distress continues to dominate the concerns of voting Americans. At the same time, Hispanic Americans, many of which are alarmed about the cultural radicalism of the modern Democratic Party, are undermining the assumptions of the “demographics are destiny” framework that has dictated so much of the Left’s political strategy in the recent decades.
Attempts to smear new-Republican Hispanics as the new “white nationalists” is surprisingly having little impact.
While Joe Biden mocks “brave, right-wing Americans” that cling to the notion that their AR-15 can protect them from the F-15s he controls, the mentally declining commander-in-chief should pay more attention to his government’s failures in Afghanistan. The Afghan military surrendered billions of dollars in high-tech military supplies to Taliban forces not because they were out-armed but because the incompetent and kleptomaniac “liberal” regime America installed lacked the true support of the people and was not a cause many saw dying for.
Likewise, the collapse of military enlistment in the American military reflects the sincere and growing disillusionment with Washington itself. While state propaganda may be trying to make the military appeal to America’s growing transgender population, they don’t seem up to the task of replacing young, white working-class men the modern class of generals dismisses as privileged.
As Murray Rothbard noted in Anatomy of the State, the state needs more than guns and bureaucrats to thrive. It needs the implicit consent of the people.
Thanks to Joe Biden, and his friends in both political parties, instead tens of millions of Americans are growing increasingly comfortable considering themselves enemies of the state.
Bribing Seniors to Volunteer
Donating time and/or resources is a virtuous activity. Parishioners volunteer for church. Parents help with their kids’ school functions. Citizens clean up parks.
Some state and/or local governments have monetized this by offering volunteering seniors a break on their property taxes. While total elimination of this odious tax is the ultimate goal, any reduction of it in the interim will do.
There are a few problems with such carve-outs though.
One thing that enables us to volunteer is our prosperity. Despite declarations by some politicos, things are shaky right now. In addition to the eyewatering price of gas, tanking stock markets, and other residual effects of government lockdowns, we’re experiencing continued labor shortages.
These discounts exacerbate that problem.
In a recent interview, one councilwoman here in San Antonio asserted that their plan is aimed at those “already” volunteering. “They may as well get credit,” she said. The official policy proposal implies otherwise.
Citing “isolation and loneliness” studies, it points to the benefits of getting seniors out of the house, how it can stem cognitive decline, among other negative effects associated with aging.
As a consequence, they’re lured away from the private sector, where seniors like my father feel they “still have more to give.”
Regardless of property tax credits’ respective sizes, seniors could still possibly lose their home, just like the rest of us, if they’re unable to pay the balance. Thousands are already more than two years late ponying up to the taxman.
It’s distinctly possible that municipalities that seek to be an “’employer of choice’” fail to see this link. It points to an underlying concern: the disconnectedness that exists between governments and citizens.
When the vast majority of staff and elected representatives favor a more active government, it’s no surprise to see official documents tout that tax “revenues performed well,” even though they weren’t earned. Respect for individuals and independent wealth-creators takes a backseat.
They can dictate “the maximum number of participants and … reduction (they) can receive,” protecting their own “so as to not adversely impact … operations.”
The media add to this chorus by characterizing exemption savings to taxpayers as what the “city loses.”
Property tax systems essentially amount to little more than social engineering tools. If programs like these “work well,” governments reserve the power to determine “other populations that may be vulnerable.”
As public appraisers themselves point out, property taxes are also an instrument for cronyism, given the inequitable favoritism shown to commercial property.
The only time politicians extend such favor to homeowners is when their respective states compel them to. Ironically, sometimes it’s the state itself that permits levying this tax in the first place.
Cracking that nut is another task altogether.
For the time being, to paraphrase Chris Rock, just because a municipality can do it, doesn’t mean it should. Alas, we keep getting the Will Smith smackdown. Political openings do however, occasionally present themselves.
Politicians like to say that their “vote is based on the needs of (their) constituents.” Too often that’s used to justify taking from some to give to others. Paid sick leave laws come to mind.
When they extend this “belie(f) in representative government” to pleas they’re hearing for “property tax relief,” voters should pounce.
These flexible principles, and any newfound religion (from “meaningless” savings of a 5% exemption, to wanting to “(go) big”), should be exploited to abolish this antiquated tax scheme for good.
People are more generous when they’re more prosperous. Government bribes need not apply.
Biden: A Proxy War with Russia Is Not Enough. We Must Also Seek War with China
If you need any more evidence that U.S. foreign policy is completely out of control, look no further than Commander-in-Chief Biden’s latest pronouncements regarding Taiwan – which is not a country.
That’s right. Not according to the United Nations or the United States government.
In fact, it is acknowledged by both that Taiwan is part of China.
Still, since its decision in the 1940s to begin seriously intervening on the side of the corrupt but nominally republican government of Chiang Kai-Shekin his decade-long struggle for power against Mao and his communist peasant guerillas, it has been U.S. policy to prevent the conclusion of the war by communist Beijing reunifying Taiwan with the mainland.
From Eisenhower to Clinton, any saber-rattling by Beijing was met with the same response: a U.S. carrier sailing through the narrow waterway separating the island(s) from the mainland.
After it recognized Beijing’s legitimacy in the 1970s, the U.S. ripped up its prior defense guarantee to the island, replacing it with security assurances akin to those received by Ukraine via the Budapest Memorandum. Officially, the U.S. position was “strategic ambiguity.” That is, it would not say one way or the other whether or not it would intervene militarily in the event of a mainland attempt to retake the island.
The tactic, maintained through six administrations and four decades, has now been thrown out the window.
After hinting this past year that he favored military intervention, Biden has now declared openly that the U.S. would militarily intervene in the event of an attack by Beijing
This amounts to a de facto preemptive declaration of war on China whenever Taipei decides.
While one is tempted to say the Senate ought to be consulted and their assent given, so mad for war is Washington these days the administration would no doubt get it.
The strategy of moving to contain China, a slow creep these past years, is now being escalated dramatically.
Other economic news announced by the White House the same day as Biden’s unilateral decree gives one to understand the Biden administration will not be risking Congress’ interference in U.S. grand strategy – which apparently amounts to needlessly escalating the single most dangerous point of transitional friction between great powers in the world.
Seeing the need to economically as well as military contain China, the Obama administration worked hard to negotiate the TPP: the largest free trade zone in the world for the next century, with the rules written largely by Washington, it could be used to constrain Beijing’s growing economic might.
When then-President Donald Trump tore up the TPP, China hawks were incredulous: after all, how could someone who wanted to get tough with China do something so obviously counterproductive?
As Thomas Freidman at the New York Times fumed at the time: why go it alone when you could gang up on Beijing?
But no matter.
With the announcement of the new Indo-Pacific Economic Framework the China hawks and geo-economic strategists have gotten the beginnings of what they wanted. With the war in Ukraine as a backdrop, they will no doubt feel confident they can get the rest.
Most troubling in all of this is whether or not it is even Joe Biden, Jake Sullivan & Co. making these decisions at all. Remember, Obama admitted to being led by the hand, while Trump was beaten into line by Russiagate and a thousand lies and leaks from the departments of State, Defense, and the National Security apparatus. How much of this was Biden being sat down and told what was happening?
Afterall, as the Wall Street Journal broke this fall: Joe Biden was informed upon taking office that the U.S. military had inserted special operators into Taiwan as Trump was leaving office.
It may very well be, as Stephen Walt wrote in his book The Hell of Good Intentions: American Foreign Policy and the Decline of U.S. Primacy, “when it comes to foreign policy, the President is less decider than presider.”
But whether it is Biden or the deep state, the future looks deeply troubling.
Blame the FDA
One of the biggest issues this last week is countless parents struggling to find formula for their infants. The blame game started and the fingers are pointing. People are slinging accusations at everything from mothers who are not nursing to Biden feeding illegal immigrant infants before united states children.
But what is the real issue? The FDA!
In mid-February the FDA shutdown Abbott Laboratories (Which also happens to be the company’s largest U.S. formula manufacturing plant) due to fears of it being the source of a bacterial infection that killed two infants. However, these fears were unfounded and the factory was cleared of any wrongdoing. Yet, almost three months later the plant is still shut down. Why? That answer isn’t as clear from the FDA.
Like any “good” government agency, the FDA put the blame back on the manufacturer: “That plant needed to be shut down,” Former FDA Associate Commissioner Peter Pitts said on Thursday.
Despite this statement and not finding any wrongdoing, he doesn’t go into details about why it needed to be shut down and why it has taken three months to get it back up and running, nor was any warning about massive future shortages given to parents.
So tough luck the FDA says for mothers who can’t nurse, single fathers, infants with allergies, gastrointestinal issues, or metabolic disorders. As parents franticly search for food for their infants and search hours online for other solutions.
Just like their covid strategy, the FDA didn’t have one here. leading to countless stressed-out parents struggling to once again feed their children.
As Tho Bishop points out:
“The costs of the FDA bureaucracy is a far greater public health risk than any of the advantages that it claims to provide. It’s past time to scrap the agency altogether.”
Indeed. Just another fine example of what happens when the government intervenes in the market. It’s time to abolish the FDA and sow salt the earth where all the buildings stood.
Biden’s Disastrous European Tour
Previewing President Biden’s trip to Europe last week, US National Security Advisor Jake Sullivan said that, “the president is traveling to Europe to make sure we stay united.”
That sure didn’t go as planned. This may have been the most disastrous – and dangerous – Presidential overseas trip ever.
The US and its NATO allies have repeatedly proclaimed that “protecting Ukraine’s democracy” has never been about threatening Russia. Holding out NATO membership and sending billions of dollars in military equipment to Ukraine, starting under Trump, was not threatening Russia. CIA training camps in eastern Ukraine, where paramilitaries were trained on US weapons systems, was not about threatening Russia.
But at every stop, President Biden seemed to undermine the narrative his own Administration had carefully crafted. First up, warning that Russia might use chemical weapons in Ukraine, Biden promised it would "trigger a response in kind," meaning the US would use chemical weapons as well. That would be a serious war crime.
National Security Advisor Sullivan had to be brought to explain that the US has "no intention" of using chemical weapons.
Later, speaking to the 82nd Airborne in Poland, President Biden told them that US troops would soon be in Ukraine. He said to the troops, “you’re going to see — you’re going to see women, young people standing — standing the middle of — in front of a … tank, just saying, ‘I’m not leaving. I’m holding my ground.’”
A White House spokesman had to clarify that, “the president has been clear we are not sending US troops to Ukraine and there is no change in that position.”
Clear? Well, not really. He had just said the opposite to our own troops!
Then, at the end of Biden’s final speech in Poland, the President inadvertently told the truth: the US involvement in Ukraine is all about “regime change” for Russia. Speaking of Russian President Putin, he told the audience, near the border of Ukraine, "for God‘s sake, this man cannot remain in power."
The President’s disaster control team immediately mobilized in the person of Secretary of State Antony Blinken, who offered this pained interpretation of Biden’s clear statement, "I think the president, the White House, made the point last night that, quite simply, President Putin cannot be empowered to wage war or engage in aggression against Ukraine or anyone else."
No, that’s not what he said. The president has a leading Constitutional role in the formation of US foreign policy, and he said in a public speech that “regime change” in Russia is US policy. Any attempt by his staffers to try to explain it away looks terrible: either the President has no idea what he’s saying so we should not take seriously what is essentially a declaration of war on Russia, or the President took the opportunity on the border with Ukraine to essentially declare war on Russia.
Presidents Reagan, Ford, and Bush Jr. were all known for their gaffes. Some were funny and some were serious. But none of them declared war on a nuclear-armed adversary in that adversary’s own backyard and then afterward had to send out staff to explain that the president didn’t mean what he just said.
Interestingly, Biden saved his most hawkish and bombastic statements for this final speech in Poland, at which none of the more cautious NATO partners like Germany and France were present. So much for “unity” being the prime purpose of the trip.
There is a real problem in the Biden Administration and the sooner we face it the better.