Author Archives: eehines

A Reformed Fed

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David Malpass, Undersecretary of the Treasury during Trump I and World Bank President during the reign of ex-President Joe Biden (D), correctly noted that the Federal Reserve Bank as currently constituted is using the wrong economic models and, as a result, has been a singular failure in controlling inflation and that it has been a failure all of this century.

He proposed some remedies.

  • Current models…need to be replaced with economic models that welcome strong investment, innovation, and job growth and recognize dollar stability as a prerequisite for price stability.
  • shrink its balance sheet to allow private-sector liquidity markets to rebuild
  • reduce staff and buildings
  • include the dollar in its inflation models
  • disentangle the Fed from fiscal policy
  • extract itself from the climate regulatory morass
  • allow regulatory innovations in banking and liquidity markets

A capitalist Federal Reserve Bank—what a concept.

There’s another reform, though, that’s an even more critical Critical Item, but this one is firmly on us citizens; it’s the responsibility of We the People. That is to reform Congress by firing those Representatives and Senators who disdain or are indifferent to the imperatives—and the intrinsic morality—of capitalism, and replace them with those who actively support capitalism.

As a man once said, that’s what elections are for. We the People are the electors.

“Extreme Emotional Disturbance”

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The lawyers defending Luigi Mangione for his (alleged) murder of UnitedHealthcare CEO Brian Thompson are planning to say that Mangione admits to his murder, and then the lawyers will argue that he can’t be held liable for his murder because he had an angst.

Guilty but insane is a viable defense in some jurisdictions, and New York, where Mangione is supposed to have committed his crime, has something of the sort. Typically, the plea results in confinement in a psychiatric facility for treatment, and on successful treatment (if that occurs), the guilty person is then transferred to a prison wherein he serves the remainder of the sentence he would have received had he been simply convicted of the crime.

That works for me.

In the event, the defense decided not to run that defense by the judge or the jury. Too bad, from my perspective. That would have gotten Mangione locked up sooner, saving the court time and the people tax money.

A Thought on the MOU

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Of course this depends on how accurately the press is reporting an unnamed official’s “readout” of what the press alleges is the Memorandum of Understanding between us and Iran regarding the Iran war. Adding skepticism to the accuracy of this readout is Iran’s insistence that the text of the MOU not be released yet.

Paragraph 1. The United States of America and the Islamic Republic of Iran and their allies in the current war, by signing this memorandum of understanding, declare the immediate and permanent termination of military operations on all fronts, including in Lebanon, and undertake from now on not to initiate any war or any military operation against each other, and to refrain from the threat or use of force against each other, and ensuring the territorial integrity and sovereignty of Lebanon. The final deal will confirm the permanent termination of the war on all fronts, including in Lebanon, and other provisions of this paragraph.
WSJ analysis
The inclusion of Lebanon is highly controversial in Israel, which is fighting a war there with Hezbollah. This official version includes tougher language on Lebanon’s sovereignty.

It’s more than controversial. The inclusion of Lebanon in this MOU is Trump’s mistake. The conflict between Hezbollah and Israel is entirely separate from the conflict between the US and Israel (and now US only) and Iran, and it should have been kept so.

Paragraph 2. The United States of America and the Islamic Republic of Iran undertake to respect each other’s sovereignty and territorial integrity and to refrain from interfering in each other’s internal affairs.
WSJ analysis
President Trump and Israeli Prime Minister Benjamin Netanyahu began the war calling on Iranians to overthrow the regime, a goal that faded as the government in Tehran held firm.

This is so blatantly wrong that the WSJ‘s “annotators” can only be taken as lying. Neither Trump nor Netanyahu (whose commentary would be irrelevant, anyway) never called for regime change—they—Trump—only said that it would be nice, and “here’s an opportunity for the Iranian people.”

Paragraph 5. Upon the signing of this memorandum of understanding, the Islamic Republic of Iran will make arrangements using its best efforts for the safe passage of commercial vessels with no charge for 60 days only from the Persian Gulf to the Sea of Oman and vice versa. The traffic of commercial vessels will immediately start, and considering the need for removing the technical and military obstacles and demining by the Islamic Republic of Iran, will be reinstated. The Islamic Republic of Iran will conduct dialog with the Sultanate of Oman to define the future administration and maritime services in the Strait of Hormuz in discussion with other Persian Gulf littoral states in line with the applicable international law and the sovereign rights of coastal states of the Strait of Hormuz.
WSJ analysis
Iran’s main obligation under the deal, lifting its chokehold on the strait. The updated version says Iran agrees not to charge fees for transit for 60 days and blesses an Iranian plan to work with Oman on the future administration of the strait, but says they must involve other Gulf states in the discussion.

This is Trump’s mistake. He needed to insist on Iran openly acknowledging the international waters characteristic of the Strait. At most, at this point, he should not have agreed to any sort of consortium involving Iran for “managing” the Strait.

A Partial Truism

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Willian Galston, in his Tuesday Wall Street Journal op-ed, has it mostly right in his discussion of the meaning of created equal as acknowledged in our Declaration of Independence.

There has always been a gap between America’s promise and its performance. This was true in the revolutionary era, and it remains so today. This doesn’t make the equality proclaimed in the Declaration false or hypocritical. It means that there is a difference between moral truth and empirical reality. Politics at its best works to narrow the gap between them….

That’s completely true, as far as it goes. But it’s necessary for us to take the next, long, critical step. Politics at its best works is far more than just politicians doing politics in the nooks and crannies and in the hallways and on the floor of our government buildings. The critical factor here is us. Us American citizens, We the People, we who are the sovereign of our nation are—or should be—the driving force, the primary political actors, of our government and of our nation.

As a great American philosopher once said, “We have met the enemy, and he is us.” But it doesn’t have to be that way.

Driving out the Successful

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In the race to see who can tax the rich the most, Rhode Island is contesting for the lead, courtesy of the State’s Progressive-Democratic governor, Dan McKee, and his legislature. The legislature has just passed and McKee just signed a bill that, among other items on Progressives’ wish list, raises the top income tax rate from 5.99% to 8.99%.

All races have winners and losers, and the losers in this race to tax are the citizens of those States whose governments keep raising taxes. It’s not just the Evil Rich who are losers in this race, though. The losers include all those whose portfolios—including 401(k)s and IRAs—benefit from the investments those rich folks make. The losers include the citizens of those high and higher tax-competing States who work, or would like to work, but the jobs aren’t expanding as much or aren’t being created at all because the Rich are constrained in how much they can grow their businesses or innovate from inside them. The losers include the small mom-and-pop businesses who fall into the Evil Rich category via the income pass-through nature of their businesses.

McKee’s tax on the rich in particular, will, as the editors at The Wall Street Journal noted, very heavily impact pass-through small businesses. What can those folks do? A glance at a map suggests a response, at least for the State over which McKee reigns. Rhode Island is 45 miles long, north to south, and its east-west width varies from 20 miles in the north to 35 miles in the south, with some detours to get to bridges across various fingers of Narragansett Bay and Mt Hope Bay. Those business owners easily could relocate to next door Massachusetts or Connecticut and still ably serve their existing customers. Those two States have high taxes, also, but not as destructively so as what McKee is inflicting.

For this Texan, for most of us in the Midwest and Pennsylvania, that’s an easy daily commute.