The Fed and Equity

And, no, I’m not writing about house ownership type equity. This concerns the Fed’s potentially increasing role in “social equity.”

The Wall Street Journal Editorial Board expressed concern about Progressive-Democrats trying to legislate into the Federal Reserve’s mandates the matter of “racial equity.” They’re correct as far as they went, but they based their concern on the Fed’s existing workload and on the question of how to assess “racial equity” in the Fed’s pronouncements and enforce the concept in its controls.

The Editors, though, missed the most important distinction and problem.

Whether or not “racial equity” is a matter to be taken seriously, it’s a political matter only, and so belongs only to the political branches of our Federal government—Congress and the White House.

The matter has no place in any Central Bank, including ours. The Federal Reserve’s function, in particular, is to protect our currency by protecting our economy—by working, under its existing statutory instructions, to maintain stable pricing, maximum employment, and moderate long-term interest rates (which means working to maintain stable pricing, since employment and interest rates fall out of that).

The Fed has no business or place in the political environment.

Another Example of the Progressive-Democratic Party’s Racism

This time, it’s in the housing market, via the Federal government-run Fannie Mae and Freddie Mac.

The plans released last week [by FHFA, which regulates Fannie and Freddie] might have been written by California Representative Maxine Waters (D). Central to Fannie’s plan are “Special Purpose Credit Programs” that increase access to credit and encourage “sustainable homeownership for Black consumers.”
One program would assist black borrowers with down payments. Most home-buyers are required to put down at least 20% of the cost of a new home to reduce the risks of default. Fannie’s plan would effectively require taxpayers to subsidize down payments for black borrowers.

It goes downhill from there.

Once again, Party explicitly favors one group of Americans while explicitly disfavoring another group of Americans—solely on the basis of race.

An Incoherent Biden Diktat

It’s in the offing. This time, President Joe Biden is threatening to inflict his “emergency powers” on American oil producing companies if they don’t produce more oil.

President Biden may resort to using emergency powers if American oil companies don’t increase output at their refineries, the president told oil CEOs in a series of letters Wednesday.
Biden’s statement blames oil companies for running “historically high profit margins” even as Americans experience surging gas prices.

Never mind that they cannot just turn on the faucet and more oil comes out of the tap. It takes lots of money and quite a bit of time to reopen capped wells, and it takes even more money and lots of time to drill a new, producing well.

But Biden’s administration stands in the way of all of that, even as he threatens his diktat. His administration has already canceled large leases in Alaska. His administration has closed most Federal lands to further exploration, much less drilling. His administration is slow-walking new lease applications. His administration is slow-walking the permits needed actually to explore, and then the permits needed actually to drill, once a lease is approved.

His administration has closed major pipelines and is slow-walking construction of other pipelines so that even were a new well drilled or an existing one uncapped, the producers would have no way to deliver output to a refiner.

Given all of that, and with existing refiners already operating at near capacity, there’s no reason to open/build new refineries—they’d have no additional oil to refine.

Beyond that, there’s the matter of trust. Beyond the time and money it takes to (re)open a well, it takes more time—years—for those costs to be recouped and profit begun to be received from the proceeds of that well. Biden’s administration, though, cannot be trusted not to pull the rug out from under those oil companies and demand wells’ or pipelines’ closure once the current—Biden-created—gas price abates.

And this: oil companies’ “historically high profit margins” exist in part (not entirely) because they’re limited in where they can commit their revenues. They can’t spend them on exploration, drilling, producing, transporting, after all because of those Biden administration policies above.

Biden isn’t alone in this incoherence, though—this is typical of his Progressive-Democrat Cabinet and of the Progressive-Democratic Party politicians who dominate both houses of Congress. Nor is the incoherence limited to oil: there’s the environment and Party’s separate global warming mantra. See, too, our southern border, Party’s immigration “policy,” Biden’s foreign policy, defense attitude, and on and on.

This Isn’t Espionage?

Three US companies—Quicksilver Manufacturing Inc, Rapid Cut LLC, and U.S. Prototype Inc—have been caught shipping technical drawings and blueprints for satellite, rocket, and defense prototypes to the People’s Republic of China, ostensibly for their cheaper 3-D printing capabilities. As a result,

Commerce Department on Wednesday suspended the export privileges of [the] three…for 180 days….

Assistant Secretary of Commerce for Export Enforcement Matthew Axelrod:

Outsourcing 3-D printing of space and defense prototypes to China harms US national security.
By sending their customers’ technical drawings and blueprints to [the People’s Republic of China], these companies may have saved a few bucks, but they did so at the collective expense of protecting US military technology.

Well, NSS.

Nevertheless,

A [Quicksilver] company employee signed a non-disclosure agreement, which included that the work be conducted in compliance with US export control regulations, the [production order from an unnamed US aerospace and global defense technology company] said. Those regulations required licenses that likely would have been denied.
But Quicksilver fulfilled the order that August without seeking a license, and included an invoice that indicated the products had been shipped from China[.]

The companies’ export “privileges” have been suspended for a whole six months.

How is Quicksilver’s behavior in particular not espionage? Why is Quicksilver in particular still in business?

Government Industrial Policy

This one EU-style. Which fits, since Europe has such long experience with the failure of economies, especially industry-driven, when dictated from the top. See, for instance, France, Germany, Italy of the last century, and France and Germany today.

One company’s (Apple, but the principle is much broader) phone charger, and the cell phones dependent on it, would become illegal throughout the EU if proposed legislation goes through. The legislation is

aiming to set a common charging standard for mobile phones and other portable electronic devices….

And

The planned legislation…is aimed at reducing electronic waste and improving consumer convenience.

Government is dictating to consumers how they will achieve the convenience Government says they want.

Never mind that if consumers want only a single charger across all battery-operated electronics (for instance), if they want a form of convenience (and not the form dictated to them by their Betters), a free market will let them drive their economies in that direction.

Sadly, the EU elitists in charge Know Better, and European citizens do not operate in a truly free market.