Daily Archives: 20 May 2021

“Merely as Districts”

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Recall the spendiferous $1.9 trillion bill enacted in March that President Joe Biden (D) and his fellow Progressive-Democrats have been pleased to call their “American Rescue Plan.” This enactment included funding explicitly for the States. Recall further that this…plan…seeks to bar recipient States from reducing their own tax rates as a condition of receiving the money.

…can’t use their share of the funds to “directly or indirectly offset a reduction” in “net tax revenue.”

Ohio demurred from that Federal intrusion into State prerogatives, as those prerogatives are made explicit in our Constitution’s 10th Amendment.

It’s possible that the Biden administration will lose on Constitutional grounds, as the Editors noted at the end of their piece, which centered on a Federal trial judge’s ruling allowing Ohio’s suit to go forward:

[I]n a preliminary opinion last week, federal Judge Douglas Cole found the state has a “substantial likelihood of success on that [Spending Clause] argument.”

But this is just an early skirmish in the Progressive-Democrats’ war on our federal republican system of governance. After all, this is the position of Biden and his brethren:

It is my first wish to see the United States assume and merit the character of one great nation, whose territory is divided into different States merely for more convenient government and the more easy and prompt administration of justice, just as our several States are divided into counties and townships for the like purpose.

And

…one of the first wishes of my heart, viz., to see the people of America become one nation in every respect; for, as to the separate [state] legislatures, I would have them considered, with relation to the Confederacy, in the same light in which counties stand to the State of which they are parts, viz., merely as districts to facilitate the purposes of domestic order and good government….

No, wait—that was John Jay, both times, regarding the power he wanted in our then nascent central government prior to the Constitutional Convention.

Biden is just bent on reviving that. Americans successfully defeated Jay in those early days. We Americans need to defeat the Progressive-Democrats’ assault today.

Inflation Expectations

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We consumers have them, and The Wall Street Journal Editorial Board ran one of their own in their Sunday piece. They also published the graph below, depicting consumer inflation expectations for the nearby future, originated by the University of Michigan’s Survey of Consumers.

Notice that. Between 2015, when the Obama “recovery” from the Panic of 2008 finally began to take hold, and 2021, when the Biden administration took office and renewed Jerome Powell’s and the rest of the Fed’s management team DOC, consumer inflation expectations remained remarkably steady in the range 2%-3%, just a skosh above the Fed’s currently claimed 2% target inflation rate.

Of course, those six years were in the face of the Fed’s artificial suppression of interest rates. Interest rates are a major driver of inflation.

However, with the Fed insisting on continuing to artificially suppress interest rates, now coupled with the Biden/Pelosi/Schumer-led Progressive-Democrat spending spree—a “checks in the checkbook, money still in the account” binge that makes Obama, and Trump, look like misers—and the resulting Federal deficit and national debt explosion, us consumers are recognizing that the money flood will override the interest rate suppression.

Because, in the end, inflation is always and everywhere a money phenomenon, not an interest rate one.

It’s possible that American consumers aren’t as dumb as our Central Bankers, enclosed in their own Beltway Bubble, make us out to be.