Tag Archives: political economy

Two Mistakes at Once

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The Federal Reserve has chosen to lower its benchmark interest rates by another quarter point, to a 3.75% to 4% band. At the same time, it has decided to call a halt to their 3½-year campaign to shrink the Fed’s $6.6 trillion asset portfolio on December 1.

That’s two mistakes in the same meeting. With inflation near (albeit less near than in the last couple of months) the Fed’s goal of 2% inflation, it’s been past time to leave its benchmark alone and to let market forces handle inflation and interest rates. Past time, because the benchmark rate historically consistent with 2% inflation has been in the range of 4½% to 5%. The Fed needs to sit down and stop tweaking with the rates.

The other mistake is to stop unloading its far too bloated asset portfolio. The Fed currently holds $6.6 trillion in Treasury assets. That’s the Fed funding too much of Treasury borrowing. The market should handle that, not the government borrowing from itself via a purely on paper accounting trick.

It’s true that unloading those assets might—even likely would—put the short term credit market into a turmoil. That especially would upset the overnight and short-term repo markets that are important to businesses’ ability to make payroll or pay other bills in the gap between irregular receipts payable and the clockwork due dates of paychecks and bills. That turmoil would be short-lived, though, as the markets readjust to a market-driven debt facility. The volatility of the turmoil would be mitigated, too, were the Fed to unload its Treasury assets simply by not replacing them until they mature, and to limit itself thereafter to holding a relative few longer-term Treasury assets—10-year Notes and bonds.

That, too

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Progressive-Democrats are keeping the government shut down over their demand to extend—permanently, no negotiations—the Obamacare subsidies that the Progressive-Democrats during the Biden reign had scheduled to expire in November of this year, pretending at the time that the subsidies were just temporary, to tide people over during the Wuhan Virus situation. Their core claim on this aspect is that Obamacare premiums, as paid by the policy holder (carefully excluding, per those same Progressive-Democrats, the premium costs paid for by us taxpayers via those subsidies), will explode.

What the press, with equal care, ignores is that the purported need for those subsidies is a direct result of the cost of the government-run health care coverage program that is the Affordable Care Act. Government-run because these are coverage policies whose coverage suites are mandated by government, including the worst mandate of them all: the requirement to charge premiums (within narrow government set bands) for ailments and potential ailments without regard for the risk of the ailment being covered, and for some of those ailments at no cost to the policy holder at all.

The Wall Street Journal has pointed out an additional price to us average Americans:

If Republicans don’t extend the turbocharged subsidies, she [Minnesota Progressive-Democrat Senator Amy Klobuchar] warned, “early retirees like Bill & Shelly [who live in Meridian, ID] will see their health insurance premiums increase nearly 300%—from $442 to $1,700.”

And [emphasis added]

This is a tacit admission that ObamaCare encourages Americans to stop working. The Biden subsidies turbocharged that incentive by making subsidies larger and available even to those with incomes above 400% of the poverty line. The couple in Ms Klobuchar’s example had north of $130,000 of income in 2024….

This demand for permanentizing the ObamaCare subsidies is just one more aspect of big government taking over our lives, reducing individual liberties (the health coverage industry does not exist in a free, competitive market where individuals can make their own choices of what coverages they want, at prices that competition would make possible) and taking the flip side of individual liberties, individual responsibilities, away from the individual and, instead, spreading them across all of us together, as brokered by Government.

The editors offer some solutions that would be a good beginning toward correcting the failure that is the ObamaCare essay into socialized medicine.

  • codifying association health plans that let small businesses join up to form a larger risk pool to improve the economics of offering insurance
  • continuing to expand plans that can be paired with tax-preferred health-savings accounts
  • fix[ing] some ObamaCare regulations like the medical-loss ratio that obliges insurers to spend 80% of premiums on claims, which in practice is a profit cap

Also needed, I claim:

  • allowing health coverage plan providers to sell policies that cover preexisting conditions at premiums consistent with the risk involved. The risk here is not certainty since the preexisting conditions will not all flare up and require medical intervention simultaneously; the risks can be amortized across time, if government only got out of the way
  • allowing individuals to choose from, and insurers to offer, tailored coverages: only primary care—annual exams, for instance, and the occasional flu or broken bone
  • coverages only for catastrophic health potentialities
  • reducing the regulatory burden on doctors who want to eschew being reimbursed via health coverage providers by doing cash reimbursements, perhaps by annual subscriptions

But to do any of that, it’s necessary for the Progressive-Democrats to end their extortionate demand on subsidies as a condition or reopening, so those discussions can begin; it’s necessary for the Progressive-Democrats to release from their basements us American people, especially the poor and their children, whom they’ve taken hostage against their demand.

No—All Must Suffer

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Recall House Minority Whip Katherine Clark (D, MA) saying the suffering of Americans during this Schumer Shutdown is leverage for Party. Recall further, Senate Minority Leader Chuck Schumer (D, NY) saying the longer his shutdown continues, the better it is for Party.

Now we have two bills on offer that demonstrate the political bankruptcy of Party’s position, to say nothing of its moral bankruptcy. One is a bill on offer from Senator Josh Hawley (R, MO) that would fund the SNAP program during the shutdown so the needy could retain access to nutrition for themselves and their kids. Ten Republicans have signed on as co-sponsors. Exactly one Progressive-Democrat has.

The other bill is one offered by Senator Ron Johnson (R, WI) that would pay essential Federal workers and those furloughed now rather than after the Schumer Shutdown ends. Many of those employees, furloughed or still working, will without their paychecks find themselves—and in too many cases are alredady finding themselves—in any of a variety of breadlines because they can’t afford groceries. The bill would be especially important for those still required to work since those folks are ineligible for unemployment benefits. Here, too, only one Progressive-Democratic Senator has signed up to support it.

Marie Antoinette was a piker. The Progressive-Democratic Party politicians won’t even let our needy and our Federal employees have any cake* to eat.

*Cake: not the modern-day sweet confection, but for the French of Antoinette’s time, cake was the bread crust burned onto the peasants’ tiny oven walls as the loaves expanded hard onto those walls.

Negotiating with Canadian Politicians

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Ontario Premier Doug Ford ran an ad pushing back on President Donald Trump’s (R) Canadian tariffs that deliberately, cynically, and dishonestly took sentences out of a Ronald Reagan speech and remixed them, shorn of their original context, into Doug Ford screed against Trump and those tariffs. This is the same Ontario Premier who earlier in the year, when trade negotiations with Canada were just getting underway, threatened to terminate the province’s energy shipments to the US.

In response to the Ford ad, Trump, last Thursday, called a halt to negotiations with Canada over trade. The Wall Street Journal‘s news writer mischaracterized the situation:

Trump threw the economic relationship with Canada into a tailspin late Thursday….

The news writer is no better than the Canadian provincial premier. Ford had thrown the economic relationship into a tailspin with his dishonestly distortionate ad; Trump was merely responding to the smear. Through his spokesperson, Kush Desai, Trump said,

Further talks are a futile effort if Canada can’t be serious.

After that, Ford said he’d “pause” his ad campaign effective today (Monday). He first ran his ad misquoting Reagan ‘way back on 16 October, fully a week before Trump acted. Now he’s magnanimously agreeing to “pause” his ad campaign after it’s run an additional four days. There’s no reason Ford couldn’t pull his distorting campaign last Thursday, whether “pausing” it or terminating it.

Trump is being uncharacteristically polite. Further talks with Canada are futile if Canadian senior politicians are going to lie about the situation.

“Stable Climate”

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Alex Flint and Kalee Kreider, posing as pro-climate adapters rather than as climate mitigators, want us to move toward adapting to our changing climate rather than attempting to mitigate our climate’s changes. That would seem to be a step in the right direction.

However.

Around the world, people are giving priority to higher living standards, economic security, and access to affordable energy above a stable climate.

This is a false dichotomy, leading to their false premise. In truth, we do have a stable climate—stable over human-level time frames—and we have it in conjunction with the potential for higher living standards, economic security, and access to affordable energy. These are not mutually exclusive.

For one thing, the plain fact is that our climate is stable over generations of humans, and that flows from the equally plain geologic fact that our climate is warming predictably, if noisily over thousands- to multi-million year cycles.

Since the end of the last glaciation, some 11,000 years ago, our climate has varied over narrow temperature ranges from the warming period that roughly coincides with the rise of human civilization and persisted into the period of the Roman empire to the Little Ice Age that ran from the early 14th century into the early 19th century. That variability, too, leaves us today still a couple degrees cooler than the geologic warming rate of our planet.

The other thing is that geologic warming rate. Our climate has been warming since the earth formed and stabilized as a solid body because our sun has been warming since it coalesced gravitationally and lit off its core fusion furnace. That warming is governed cyclically by our planet’s not quite circular orbit around the sun, which moves us closer and farther from the sun—not by much but by measurable temperature effects—on a cycle that harmonizes with our planet’s rotational axis precession, a cycle that points our norther hemisphere toward our sun in some seasons and away from our sun in the six months later seasons, a precession that points our northern hemisphere toward the sun in summer, roughly 6,500 years later has our northern hemisphere pointing away from the sun in summer, then after another 6,500 years points it back toward the sun in summer again for a complete cycle of about 13,000 years. That precessional cycle harmonizes with our orbit’s behavior over some hundreds of thousands of years.

Around that lockstep cycling, our climate varies noisily from the presence of an atmosphere that maintains a more stable temperature across days and months—and centuries—while being intermittently impacted by volcanism and meteor strikes. The outcome of those orbital and rotational mechanics and the interactions of volcanism and meteor strikes has produced the geological record of epochs much warmer and colder than today with life being lush in the warm periods, along with epochs of atmospheric CO2 being much higher and much lower than today, with life being lush in both higher and lower CO2 epochs—life has been lush when it was warmer independently of CO2 concentrations with no correlation between the CO2 epochs and the warmer and cooler epochs.

Mitigation always has been a scam to draw Federal funding for pet research projects.

Even though this op-ed’s excuse for shifting to adaptation comes from that false premise, it’s still a welcome step toward economic prosperity and sanity.