Foolishnesses

There were two by Bank of Japan managers in the Wall Street Journal lede regarding the BoJ’s interest rate moves.

A week after Japan’s top central banker shook up global markets with comments about raising interest rates, one of his deputies walked them back Wednesday and promised not to raise rates when markets are unstable.

The lesser of the two foolishnesses is that walkback of the BoJ’s statement that it was about to raise interest rates. The increase was both correct and necessary sooner rather than later. The deputy never should have been authorized to walk that commitment back. The BoJ simply should have stopped talking about the raise, having said it was coming. It should have simply done the raise at the appointed time.

The larger foolishness, though, was that subsequent commitment. It’s a promise that no one in the BoJ has any hope of keeping, or the BoJ will never raise interest rates. Stock markets are always unstable.

The stock market’s equilibria—moving sideways for a time—are unstable; it takes no particular event or perceived event to bump the market into a rise or a drop. Rises in the market are not stable; it takes no particular event or perceived event to bump the market into a short- or intermediate- or long-term fall—or into another supposedly stable sideways move. Falls in the market are not stable; it takes no particular event or perceived event to bump the market into a short- or intermediate- or long-term rise—or into another supposedly stable sideways move.

Timing the market is a money losing move; even when central bankers try it. All timing does is mitigate losses, at the expense of long-term gain, but even that presupposes some measure of stability. Long-term gain sacrifice as the price to pay for mitigating losses often is useful for those individuals who must preserve the wealth they have—they’re retired, for instance, and have no other income—but sacrificing long-term gain is a bad move for a nation, whose citizens need long-term growth for the sake of their own and future generations.

If central banks want market stability, such as may be available within a band of inflation around a target rate, they must generate that more-or-less availability by setting their nation’s interest rates at levels historically consistent with their nation’s inflation goals and then leave those rates alone and live with the natural volatility of a free market.

“Debate Kamala Harris, Mr Trump”

That’s the headline of William McGurn’s Monday editorial, and his piece goes on at some length on that theme. It’s unfortunate to see such a piece from the usually astute McGurn.

In fact, former President and Republican Presidential candidate Donald Trump has already offered to debate the Progressive-Democrat Harris. He’s proposed a specific date, 4 September; proposed Fox News‘ Bret Baier and Martha MacCallum moderate it; and that the debate operate under substantially the same rules as the originally scheduled and now no longer existent debate with Joe Biden—just with a couple of additions: the debate with Harris that Trump has proposed would occur in a town hall venue, with a live audience present.

Harris is skittering away from that as fast as she can.

McGurn should call on Harris to accept the offered debate.

They’re At It Again

Never mind Progressive-Democrat President Joe Biden’s mantra of “building [America] from the middle out and the bottom up. Here, in a nutshell, is Progressive-Democrat Vice President and Progressive-Democratic Party Presidential candidate Kamala Harris’ proposed economic policy:

Building up the middle class will be a defining goal of my presidency[.]

Biden’s execution of his mantra favored wealthy special interests, vis., green lobbyists, buyers of expensive battery cars and solar panels, and on and on.

Harris has dropped all pretense of carrying a single copper penny about the poor, which has been all too typical of the Democratic Party and its evolution, today’s Progressive-Democratic Party. They yap about the poor, and then they do nothing.

It Needn’t, Though

The Wall Street Journal headline makes a prediction, and the subheadline adds to it:

Market Selloff Upends Fed Rate-Cut Calculus
A further slowdown in the labor market could lead to a larger half-point rate cut next month

It needn’t, though, and if Federal Reserve Chairman Jerome Powell and his Board of Governors make such a move, they’ll be ignoring history.

Inflation is right next door to the Fed’s goal of 2%\yr; the delta between today’s inflation and that target is in the region of noise around the signal.

The stock market is down a bit, even if sharply: for all the steepness of the drop over the last few days, it’s still only down 6-ish percent, not even a correction level.  The market also is irrelevant.

Historically—and history did not begin with the dot com bubble burst—Fed benchmark interest rates that have been consistent with 2% inflation have been in the 5% region. That’s where the Fed is now, and that’s where our economy’s inflation is now.

But wait—unemployment has risen to 4.3%. I say, so what. That level, and the increase over the prior month and especially the past year, plus, certainly bear watching. However, the increase is off historic lows for unemployment, and the present level remains consistent with full employment, which is another of the Fed’s statutory goals.

It’s time for the Fed—for Powell and his BoG members—to say so on both matters, and to say they’re now going to sit down, be quiet, and let market forces—this time, meaning private economy forces—do their trick unfettered by artificially, and arbitrarily, set government-managed interest rates. Who wins then? Our private economy, with both stable pricing and stable business cost of money—interest rates.

Other major winners would include the stereotypical widows and orphans, and old folks, and anyone else who depends in significant part on fixed income, which is to say interest-driven, instruments.

I repeat myself, but this bears repeating.

Speaking of Proud Records…

Progressive-Democrat Vice President and Progressive-Democratic Party Presidential candidate Kamala Harris is a woman of verbally flexible policies.

At a 2020 primary campaign town hall, Harris had this position:

There’s no question I’m in favor of banning fracking. And starting with what we can do on Day One around public lands, right?

In today’s Presidential campaign season, she’s claiming to not be opposed to fracking. After all, [o]ne important swing state, Pennsylvania, is the second largest producer of natural gas.

Following the George Floyd murder and subsequent race riots (many of which victim neighborhoods still have not recovered from them), Harris was a zealous supporter of defunding police departments.

Defund the police, the issue behind it is that we need to reimagine how we are creating safety.

For too long, the status quo thinking has been, you get more safety by putting more cops on the street. Well, that’s wrong, because by the way, if you wanna look at upper middle class suburban neighborhoods, they don’t have that patrol car.

Now she’s pushing funding police departments.

On illegal aliens flooding across our borders: when a debate moderator asked, in a 2019 Progressive-Democratic Party Presidential primary campaign debate, whether they [the candidates] would be in favor of decriminalizing border crossings, Harris signaled her agreement with such a decriminalization. Then, post-election, Progressive-Democrat President Joe Biden gave Harris the job of being border czar (the press’ term, which in their own convenient flop, they’re trying to deny they ever used), and Harris has acted on her decriminalization position by…doing nothing regarding tightening border security.

Now, during this campaign season, Harris is claiming to be supportive of tightening border controls.

Progressive-Democrat President Joe Biden is in on the scheme of claiming altered positions at political convenience:

White House officials told Politico that these shifts are part of a strategy to undermine the argument that she is a leftist politician, a reputation they believe stems from the positions she took in the 2020 Democratic primary, but which they say do not truly represent Harris’ positions.

Of course, they are her positions, though. Harris was saying what she actually believed when she pushed those earlier positions. Today, she’s merely covering her political behind and pretending to espouse these “changes” purely for her political gain in an election year. Keep in mind those earlier positions; they’re what she will work to implement if she’s elected.