The arrival of the New Year typically brings a sense of renewed hope and optimism. It’s a moment for fresh starts and the chance to turn over a new leaf.
However, the transition to a new year is rarely that straightforward. Wouldn’t it be wonderful if simply changing the calendar could erase our past mistakes—for good?
Regrettably, like unpaid bills, our past errors linger, and we must confront them.
In the arenas of finance and politics, lawmakers at Congress, the U.S. Treasury, and the Federal Reserve have accumulated a staggering number of missteps over the years. Decades of deficit spending and currency devaluation have piled up like trash left unattended during a workers’ strike.
These issues are not going away. They require careful attention.
While many Americans reveled in holiday festivities, Treasury Secretary Janet Yellen took the time to draft a letter that may have slipped under the radar. Most probably missed it.
In her December 27 correspondence with House Speaker Mike Johnson, Yellen issued a caution about the ramifications of prior decisions. Specifically, she indicated that the Treasury anticipates reaching the statutory debt ceiling somewhere between January 14 and January 23. Continue reading
Life seldom goes according to plan. An unexpected car repair can throw a wrench in the budget, and a protracted illness may stall the completion of important tasks.
This unpredictability is especially true for the strategies of central planners. A five-year plan may set forth specific goals and a strategy to achieve them, but reality often diverges from that path.
The Federal Reserve initiated its rate-cutting cycle on September 18, when the yield on the 10-Year Treasury note was around 3.70 percent. Despite a total reduction of 1.00 percent in Fed rates, the yield on the 10-Year Treasury note has since risen to 4.60 percent. This indicates a disconnect in the Treasury market despite the Fed’s efforts.
A possible explanation for this divergence is that the Fed may have erred in claiming ‘mission accomplished’ in its battle against consumer price inflation. It presumed that the recent moderation in inflation would continue and that prices would soon align with its arbitrary target of 2 percent. Continue reading
Recently, clouds loomed over the Eccles Building in Washington, D.C. as the Federal Open Market Committee (FOMC) held its concluding meeting of the year.
Within the temperature-controlled walls, a group of unelected central planners sipped coffee brewed from imported beans while they debated how to regulate the cost of credit.
The central concept is that the Federal Reserve can smooth out the business cycle by controlling the money and credit supply. However, the Fed’s history over the past 110 years suggests otherwise, marked by persistent inflation and the growth of financial bubbles.
It’s essential to recognize that the Fed primarily serves the interests of privately-owned commercial banks through its twelve regional Federal Reserve Banks. Any efforts to boost the economy are often secondary.
Understanding this unacknowledged objective is key to making sense of the Fed’s statements and actions, which don’t always align. Continue reading
A prominent characteristic of the political climate in the United States is the pervasive disagreement over facts and how the economy should operate. Should it adhere to laissez-faire principles, or should more regulatory measures be implemented?
Many politicians promote free markets when seeking votes, yet history shows that big government is often the preferred solution.
President-elect Trump, for instance, advocates for both sides. He aims to reduce regulations and cut spending, while also safeguarding Social Security, increasing defense expenditures, and imposing substantial trade tariffs on foreign goods.
The harsh reality is that you cannot have everything you desire. Once you obtain something, it becomes part of the past—a resource already consumed.
This situation explains why individuals like Elon Musk and Vivek Ramaswamy will struggle to trim $2 trillion from the budget. Without substantial concessions in entitlement programs and defense spending, achieving such cuts appears implausible. Continue reading
