A Silly Tradeoff

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In an editorial regarding former President and current Republican Presidential candidate Donald Trump as “Central Banker”—The Wall Street Journal editors’ tongue-in-cheek term—those same editors noted this about the Federal Reserve’s economic models:

[T]he Fed staff’s models that are still rooted in the tradeoff between inflation and unemployment.

The editors are right about that being a mistake; although they don’t expand on that claim with their reasoning about why that’s a mistake.

My claim about why that’s a mistake is this. First, the Fed’s situation is rooted in its statutorily mandated requirement to maintain price stability and to maintain full employment. The view from Congressional and White House politicians, the Fed, and so many economists is that these are separate, if not mutually opposing (and so not so separate) requirements.

My view, then, is that the two requirements are closely related, but in sequence, not in opposition. Keeping prices reasonably stable—the Fed’s nominal inflation target of 2% per year works well enough—greatly facilitates a healthy, growing economy. That healthy, growing economy itself pushes toward full employment. The Fed’s strongest move toward its full employment mandate, then, is to satisfy its mandate of maintaining price stability and to take no overt action regarding employment.

What’s He So Terrified Of?

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Secretary of State Anthony Blinken postponed a scheduled trip to the Middle East amid heightened tensions in the area and a possible attack on Israel by Iran. The trip ostensibly was to continue to pressure Israel to agree a ceasefire with the terrorists who began their war to exterminate Israel.

Possible attack by Iran on Israel? What better time for a senior US government official to visit Israel could there be? SecState’s presence in Israel would greatly raise the stakes for Iran as it contemplates, or executes, its own effort to destroy Israel.

Blinken could have used the time in Israel to coordinate with them on defenses against an Iranian attack and against a coordinated set of attacks by Hamas, Hezbollah, Houthis, and Iran, as well as moves post attack to finish Hamas and to kinetically punish Hezbollah, Houthis, and Iran.

Instead, Blinken—consistent with the Biden-Harris administration generally—chickened out.

Open Borders

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Even when they tout their secure the border policies, Progressive-Democratic Party politicians are deliberately leaving our borders wide open and unsecured.

The Family Expedited Removal Management (FERM) program was announced in in May 2023 and the administration has only removed around 2,600 illegal immigrants under the program arriving as family units while border patrol apprehended almost 850,000.

That’s three-tenths of one percent of those “families” caught illegally entering our nation who actually got deported.

This is Border Czar, Progressive-Democrat Vice President, and Party Presidential nominee Kamala Harris’ Newspeak Dictionary definition of “secure border.”

This is a small taste of what we will get in the United States, in spades, if the Harris-Walz ticket is elected this fall.

Endless War Retreat

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There are endless wars, and there are endless wars. Our nation’s wars in Iraq and Afghanistan seemed endless because of mission drift by a sequence of American administrations. Our goals in Iraq were, initially, limited and specific; although with hindsight, President Bush the Elder’s goals might have been too limited, a condition which led to the second phase of that war, the move to overthrow the Saddam Hussein regime. That goal, though, was nebulously defined, then it “evolved” across successive administrations, leading to continued combat involvement over too many years in Iraq.

Our war in Afghanistan began as a move to punish and destroy the al Qaeda that had executed the terror attacks in 11 September 2001. That mission was largely accomplished promptly, although it took a few more years to track down bin Laden and deal with him with finality. That tracking didn’t benefit overmuch by our continued warring in Afghanistan, though; instead that mission continually “evolved,” also, and we stayed in that fighting for some twenty years.

Those were two unnecessarily endless wars.

There is another war, though, that truly is endless, and the Biden-Harris administration is rapidly retreating from it, making that war increasingly dangerous to us and to our friends and allies. That’s the war terrorists—especially the rump al Qaeda and a rapidly regrowing Daesh—are fighting against us.

…Islamic State poses a growing threat to the US and its interests. You wouldn’t know it based on the Biden administration’s withdrawal from terrorist hot spots across South Asia, the Middle East, and Africa.

And [emphasis added]

Over the past year alone, Islamic State has been linked to terrorist attacks and plots in Afghanistan, Austria, Belgium, Germany, India, Iran, Pakistan, Russia, Serbia, Switzerland, and Turkey, among others. On July 25, the day before the opening ceremony of the Paris Summer Olympics, Belgian authorities arrested suspected members of ISIS-K for planning a terrorist attack. And in June, US law enforcement arrested eight suspects with possible Islamic State ties who had crossed the border from Mexico.
Yet the US has cut and run from terrorist sanctuaries. This month the US military turned over control of its final base in the African country of Niger even though the Islamic State and al Qaeda are on the rise in the region.

The latest example of this endless war, which is a direct outcome of our administration’s retreat, was the terror threat against a popular singer and her audience at a concert in Vienna.

Thanks to intelligence the US collected, Austrian law enforcement arrested three suspects for their involvement in an alleged plot to explode bombs and use knives against concertgoers at the Ernst Happel Stadium [where Taylor Swift had intended to hold an Eras Tour concert].
The alleged plotters had both the intention and capabilities to conduct a major attack. One of them, a 19-year-old Austrian, had recently pledged loyalty to ISIS. According to the head of Austria’s Directorate of State Security and Intelligence, he was aiming to kill “as many civilians as possible” in a suicide attack. He and one of his alleged accomplices, a 17-year-old man, had apparently radicalized online.

Maybe it’s time for the Biden-Harris administration, and for subsequent administrations, to learn the difference between endless wars and endless wars, stop running away from all of them without discrimination, and get after the terrorists who are fighting their otherwise endless war against us and against our friends and allies.

Another Example

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Lots of folks—pundits who should know better—expend a lot of ink and pixels commenting on the stock market’s behavior and how that’s a powerful indicator of our underlying economy. I, on the other hand [ahem] have commented on the stock market’s firm tie to our underlying economy, but with a lot of slack in that connection: there is a lot of highly variable time lag between the private, real economy in which all of us must live and operate and the stock market in which investors (which includes far more of us than those same pundits seem to understand) operate, with the real economy, which drives the stock market, making its moves and the stock market, eventually, responding, or the stock market betting on an upcoming real economy move that may or may not happen within a useful timeframe, or at all.

Here’s an example of that essential temporal disconnect:

They [investors] built over months: big bets on the Japanese yen. Complex cryptocurrency wagers. Investments in hot tech companies.
Common to all the trades were heavy doses of leverage, or borrowed money, which investors used to amplify expected gains. As markets rose through the first half of 2024, the investments generated windfall profits, inspiring copycat traders to get on board and pushing prices higher.
Now the tide has turned. Unrest has returned to global markets over the past month, and investors are now in retreat from these once-unstoppable trades.

Very few of those moves had any direct connection with the underlying real economies as they were behaving in the moment or had been behaving for some time. They were moves in anticipation of those real economies’ future behavior.

My point here is not to stay out of the stock market altogether and forever. It is, contra the above, always a good time to invest in the American stock market. Just don’t constantly chase the latest hot tip or gee whiz fad. Don’t assume, either, that what the real economy does will be promptly reflected in the stock market or vice versa. The former likely will occur, but only eventually; the latter is a crap shoot on the house’s table.

Instead, have clearly defined—and written down, so memories can’t fade or impressions can’t distort memories—goals and a clearly defined—and written down, so memories can’t fade or impressions can’t distort memories—plan for getting there.

Do the research necessary to understand investing and investment plans and development, do the necessary research into the companies under consideration for investment and/or into the stock selection algorithms you intend to use, and then stick to your plan. That plan, too, cannot be impossible to change, but it should be very difficult to change.

Yes, it takes work. But that’s the nature of success in any endeavor.