Will Tax Reform Increase or Limit Liberty?

President Trump and the congressional Republican leadership recently unveiled a tax reform ‘framework.’ The framework has a number of provisions that will lower taxes on middle-class Americans. For example, the framework doubles the standard deduction and increases the child care tax credit. It also eliminates the alternative minimum tax (AMT). Created in the 1960s, the AMT was designed to ensure the ‘wealthy’ did not use ‘loopholes’ to ‘get out of’ paying taxes. Today the AMT is mostly a means to increase taxes on the middle class.
The framework eliminates the ‘death tax,’ thus enabling family-owned small businesses and farms to remain family owned. It also helps the economy by lowering the corporate tax rate to 20 percent, reducing taxes on small businesses. The framework also adopts a territorial tax system, which means US companies would only pay tax on profits earned in the United States.
However, the framework is far from a total victory for liberty. Concerns have been raised that, depending on what income levels are assigned to what tax brackets, the plan could increase taxes on many middle- and lower-income Americans! This is largely due to the framework’s elimination of most tax deductions.
The framework also contains a stealth tax increase imposed via the chained consumer price index (chained CPI). Supporters of chained CPI clam the government is currently overstating inflation. The truth is exactly the opposite: government statistics are manipulated to understate inflation.

This post was published at Ludwig von Mises Institute on October 10, 2017.

The Fed will be a New Creature Soon, and No One Knows What It’ll Look Like

Markets are blowing off this uncertainty for now.
On Thursday, the Senate confirmed Randal Quarles, President Trump’s first Fed nominee, as a member of the Federal Reserve Board of Governors. During his confirmation hearing, Quarles said it was time to roll back some of the regulations that were imposed on banks after they’d imploded and threatened to take down the global financial system. He will become the chief bank regulator at the Fed, filling the slot that Daniel Tarullo left behind when he resigned unexpectedly in April.
Quarles is founder of private investment firm, The Cynosure Group. Fed Governor Jerome Powell is also a Cynosure alumnus. Quarles had been a partner at private equity firm The Carlyle Group and served as undersecretary of the Treasury under President George W. Bush. WHIRRRR makes the revolving door.
One down, four more to go.
The Fed’s Board of Governors has seven slots, currently chaired by Janet Yellen. After Quarles’ appointment, potentially four more will need to be filled over the next few months.
The seven board members are part of the policy-setting 12-member Federal Open Markets Committee. The other five members of the FOMC are the president of the New York Fed and on a one-year rotating basis four presidents of the remaining 11 regional Federal Reserve Banks.

This post was published at Wolf Street on Oct 6, 2017.

Obama Is Funding The Anti-Trump Movement With Sleazy Backdoor Policies And Taxpayer Money

Barack Obama is funding the anti-Trump movement through a series of backdoor deals and policies. Wall Street may be surprised to learn that it is also helping bankroll the anti-Trump ‘resistance’ whether they wanted to or not. Wall Street is fighting policies which would heavily favor it, including corporate tax cuts and the repeal of Obama-era banking and health-care regulations.
We have the Obama administration to thank for the harsh anti-Trump movement by far left groups, according to an article by the New York Post.
The Obama administration’s massive shakedown of Big Banks over the mortgage crisis included unprecedented back-door funding for dozens of Democratic activist groups who were not even victims of the crisis. At least three liberal nonprofit organizations the Justice Department approved to receive funds from multibillion-dollar mortgage settlements were instrumental in killing the ObamaCare repeal bill and are now lobbying against GOP tax reform, as well as efforts to rein in illegal immigration. An estimated $640 million has been diverted into what critics say is an improper, if not unconstitutional, ‘slush fund’ fed from government settlements with JPMorgan Chase and Co., Citigroup Inc. and Bank of America Corp., according to congressional sources.
The payola is potentially earmarked for third-party interest groups approved by the Justice Department and HUD without requiring any proof of how the funds will be spent. Many of the recipients so far are radical leftist organizations who solicited the settlement cash from the administration even though they were not parties to the lawsuits, records show.
‘During the Obama administration, groups committed to ‘revolutionary social change’ sent proposals and met with high-level HUD and Justice Department officials to try to get their pieces of the settlement pie,’ Cause of Action Institute vice president Julie Smith told The Post. -New York Post

This post was published at shtfplan on September 25th, 2017.

Dear Jamie Dimon: Predict the Crash that Takes Down Your Produces-Nothing, Parasitic Bank and We’ll Listen to your Bitcoin “Prediction”

This is the begging-for-the-overthrow-of-a-corrupt-status-quo economy we have thanks to the Federal Reserve giving the J. P. Morgans and Jamie Dimons of the world the means to skim and scam the bottom 95%. Dear Jamie Dimon: quick quiz: which words/phrases are associated with you and your employer, J. P. Morgan? Looting, pillage, rapacious, exploitive, only saved from collapse by massive intervention by the Federal Reserve, the source of rising wealth inequality, crony capitalism, privatized profits-socialized losses, low interest rates = gift from savers to banks, bloviating overpaid C. E. O., propaganda favoring the financial elite, tool of the top .01%, destroyer of democracy, financial fraud goes unpunished, free money for financiers, debt-serfdom, produces nothing of value to society or the bottom 99.5%. Jamie, if you answered “all of them,” you’re correct. The only reason you have a soapbox from which you can bloviate is the central bank (Federal Reserve) saved you and your neofeudal looting machine (bank) from well-deserved oblivion in 2008-09, and the unprecedented, co-ordinated campaign by global central banks to buy trillions of dollars of bonds and stocks.

This post was published at Charles Hugh Smith on WEDNESDAY, SEPTEMBER 13, 2017.

So Where Does the Money Go that Mexico Borrows?

Answers emerge. Including offshore private accounts.
Mexico’s public debt-to-GDP of 50% may seem modest by today’s inflated standards, but when it comes to debt, everything is relative, especially if you don’t enjoy the benefits that come from having a reserve-currency-denominated printing press, and if you borrow in a foreign currency that you don’t control.
As the debt load grows, more and more of the States’ financial resources must be used to service it. As El Financiero reports, the cost of servicing Mexico’s debt, despite super-low interest rates globally, has almost doubled in the last five years, and is now higher than it has been at any time since 1990. In fact, according to the Government’s own figures, more state funds will be spent this year on servicing the debt than on all public infrastructure projects put together.
Yet as the government scrimps and scrapes in areas that might actually help to boost economic growth, it’s more than happy to dig deep to fill its own pockets.
A joint investigation by the news website Animal Politico and the NGO Mexicans Against Corruption and Impunity has revealed that, amidst all the budget cuts, the Pea Nieto Government has been using a complex web of shell companies to make hundreds of millions of dollars of public funds, originally intended for public causes such as combating poverty or financing public education, completely vanish.

This post was published at Wolf Street on Sep 11, 2017.

There Is One Way Out of Debt-Serfdom: Fanatic Frugality

Debt is serfdom, capital in all its forms is freedom.
If we accept that our financial system is nothing but a wealth-transfer mechanism from the productive elements of our economy to parasitic, neofeudal rentier-cartels and self-serving state fiefdoms, that raises a question: what do we do about it?
The typical answer seems to be: deny it, ignore it, get distracted by carefully choreographed culture wars or shrug fatalistically and put one’s shoulder to the debt-serf grindstone.
There is another response, one that very few pursue: fanatic frugality in service of financial-political independence. Debt-serfs and dependents of the state have no effective political power, as noted yesterday in It Isn’t What You Earn and Owe, It’s What You Own That Generates Income.
There are only three ways to accumulate productive capital/assets: marry someone with money, inherit money or accumulate capital/savings and invest it in productive assets. (We’ll leave out lobbying the Federal government for a fat contract or tax break, selling derivatives designed to default and the rest of the criminal financial skims and scams used so effectively by the New Nobility financial elites.)

This post was published at Charles Hugh Smith on THURSDAY, MAY 04, 2017.

The Irony of Stable Inflation

In February 2000, the FOMC quietly switched from the CPI to the PCE Deflator as its standard for inflation measurement. There were various technical reasons for doing so, including the CPI’s employment of a geometric mean basis (which was in 2015 finally altered to a Constant Elasticity of Substitution formula). But it was one phrase that in hindsight did the Fed no favors, as it explicitly cited the expected fruits of the PCE Deflator’s methodology which would ‘avoid some of the upward bias associated with the fixed-weight nature of the CPI.’
I am not a conspiracist by any means, but there are times when you have to shake your head as these economists lack even a modicum of self-awareness. The central bank has been given a legal mandate for price stability, so the average American might wonder why that central bank is allowed to choose the measure most inherently stable (and low). At the very least, it seems like a conflict of interest, one among so many.
In that regard, the last five years have been almost fitting. The PCE Deflator has, as expected, avoided the higher beta tendencies of the CPI and in both directions. For that, it has remained stable, alright, but stable below target no matter what the Fed does with its own balance sheet. I hope the irony is not lost on them, especially as it was oil prices that ‘achieved’ what they could not despite considerable expenditure on their part.

This post was published at Wall Street Examiner on May 1, 2017.

Central Banks Have a $13 Trillion Problem

Paycheck to Paycheck
GUALFIN, ARGENTINA – The Dow was down 118 points on Wednesday. It should have been down a lot more. Of course, markets know more than we do. And maybe this market knows something that makes sense of these high prices. What we see are reasons to sell, not reasons to buy.
Nearly half of all American families live ‘paycheck to paycheck,’ say researchers. Without borrowing, 46% couldn’t raise $400 to cover an emergency. This is at least part of the reason why retail sales dropped for the second month in a row in March. Despite seven years of economic ‘recovery,’ millions of Americans don’t have much money.
According to Census Bureau figures, 110 million Americans receive benefits from means-tested federal programs – food stamps, disability, and the like. And according to the Bureau of Labor Statistics, about 125 million Americans have full-time work (with another roughly 112 million without jobs).
That means there are only 125 million people in full-time jobs supporting the whole kit and caboodle of the U. S. economy, with a total population of 323 million. At that rate, each full-time worker supports about 2.6 people… including almost one person receiving money from the feds.
They are also supporting a government debt of $20 trillion and private debt of another $40 trillion or so. That puts the debt-to-full-time-worker ratio at $480,000. The average salary for a full-time worker is just $48,000. At a modest 5% interest, his share of the debt cost would set him back $24,000 each year.
He’d have only the remaining $24,000 to support (1) his own family… and (2) all the malingerers, cronies, and zombies who are drawing government benefits. Obviously, those numbers don’t work. But they explain much of the weakness in the U. S. economy.
The feds’ cheap credit keeps moving money (mostly in the form of asset price increases) to the wealthiest ZIP codes… while the average person’s budget gets tighter and tighter.

This post was published at Acting-Man on April 21, 2017.

Marx, Orwell and State-Cartel Socialism

When “socialist” states have to impose finance-capital extremes that even exceed the financialization of nominally capitalist economies, it gives the lie to their claims of “socialism.” OK, so our collective eyes start glazing over when we see Marx and Orwell in the subject line, but refill your beverage and stay with me on this. We’re going to explore the premise that what’s called “socialism”–yes, Scandinavian-style socialism and its variants–is really nothing more than finance-capital state-cartel elitism that has done a better job of co-opting its debt-serfs than its state-cartel “capitalist” cronies. We have to start with the question “what is socialism”? The standard definition is: a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole. In practice, the community as a whole is the state. Either the state owns a controlling interest in the enterprise, or it controls the surplus (profits), labor rules, etc. via taxation and regulation.

This post was published at Charles Hugh Smith on WEDNESDAY, APRIL 19, 2017.

Battle Royale: JPMC’s Dimon and Minneapolis Fed’s Kashkari Battle Over Bank Capital

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
Bloomberg has nice piece on the battle between JPMorganChase’s Jamie Dimon and the Minneapolis Fed’s Neel Kashkari.
(Bloomberg) Jamie Dimon is America’s most famous banker, and Neel Kashkari is its most outspoken bank regulator, so it’s not a shock that they would eventually come to blows. What’s interesting is that their contretemps is over an acronym that most Americans have never heard of, but one that may be central to preventing another recession.
TLAC, which is pronounced TEE-lack, is something you need to know about if you want to judge the sparring between Dimon, the well-coiffed chief executive of JPMorgan Chase & Co., and Kashkari, the very bald man who ran for governor of California on the Republican ticket and is now president of the Federal Reserve Bank of Minneapolis.
On April 6, Kashkari went after Dimon in a way that circumspect central bankers ordinarily don’t. In an essay published on Medium and republished on the Minneapolis Fed website, he challenged Dimon’s assertion in his annual letter to shareholders that 1) there’s no longer a risk that taxpayers will be stuck with the bill if a big bank fails, and 2) banks have too much capital (meaning an unnecessarily thick safety cushion). Wrote Kashkari: ‘Both of these assertions are demonstrably false.’

This post was published at Wall Street Examiner by Anthony B Sanders ‘ April 14, 2017.

Big Pharma and the FDA vs. Nutritional Supplements

“While the idea of admitting that a bureaucracy is necessary, I must also admit that marketers are liars and if left unregulated will rival politicians in their dishonesty when making product claims. Both admissions shake my libertarian sensibilities to the core.”
First, a free market eventually corrects for the condition of “marketers are liars,” unlike with politicians. Furthermore, not ALL marketers are liars.
Second, what makes you think the FDA, or any government bureaucracy for that matter, doesn’t lie? If one thinks we need an FDA, then one should think that we also need an EPA, FED, NLRB, EEOC, and on, and on, and on … further violating your libertarian sensibilities.
The head administrator of the FDA is pretty much a revolving door with Big Pharma:
is government regulation always the knee jerk reaction to every ill that affects society? Can you creatively think of some other solutions that don’t violate the Constitution of the United States? Keep reading, and maybe some other ideas will present themselves.
More people die every year from legalized drugs than from taking supplements, not to mention the drugs the FDA eventually gets around to recalling, after they’ve already done their damage. In addition, the FDA is continually pushed by vested interests (Big Pharma and lobbied government officials) to cut corners so that drugs can get to market faster. So much for the efficacy of the FDA! So, you want more of the same?
lot of medical doctors are in the back pocket of Big Pharma, not to mention the AMA:
can go here to find out if your particular doctor is on the take:

This post was published at Gary North on March 25, 2017.

NAFTA’s Mixed Track Record Since 1994

On January 1, 1994, the North American Free Trade Agreement (NAFTA) officially came into effect, virtually eliminating all tariffs and trade restrictions between the United States, Canada, and Mexico.
Bill Clinton, who lobbied extensively to get the deal done, said it would encourage other nations to work towards a broader world-trade pact. ‘NAFTA means jobs. American jobs, and good-paying American jobs,’ said Clinton, as he signed the document, ‘If I didn’t believe that, I wouldn’t support this agreement.’
Ross Perot had a contrary perspective. Lobbying heavily against the agreement, he noted that if it was ratified, Americans would hear a giant ‘sucking sound’ as jobs went south of the border to Mexico.
It’s a Complicated World
Fast forward 20 years, and NAFTA is a hot-button issue again. Donald Trump has said he is working on ‘renegotiating’ the agreement, and many Americans are sympathetic to this course of action.
However, coming to a decisive viewpoint on NAFTA’s success or failure can be difficult to achieve. Over two decades, the economic and political landscape has changed. China has risen and created a surplus of cheap labor, technology has changed massively, and central banks have kept the spigots on with QE and ultra-low interest rates. Deciphering what results have been the direct cause of NAFTA – and what is simply the result of a fast-changing world – is not quite straightforward.

This post was published at The Burning Platform on March 25, 2017.

Repeal and Replace Needn’t Be Complicated

The Republicans have a problem. Healthcare prices are so swollen by government imposed monopolies that most people cannot possibly afford to pay the crazy bills without subsidies. What to do?
Example: my son recently went to an out-of-state emergency room for food poisoning. The bill came in at over $8,000. And how is this for fairness: our insurance company knocked it down to about $4,000. An uninsured person would have been liable for the full amount. Might even have faced bankruptcy for failure to pay it.
I personally lobbied for a provision in Obamacare preventing hospitals for charging the uninsured more than the insured. Obama said no. Why? Because the idea upset the hospitals. They wanted to be able to continue to exploit the uninsured. Whew. What does that tell us about Obama?
Under these circumstances, average people cannot possibly pay their medical bills unassisted. Yet if you repeal Obamacare by imposing new price controls and subsidies, in other words, pour old, spoiled wine into new bottles, you just perpetuate the problem. So what to do?
Prices can never be reduced by price controls, much less by price controls on government imposed monopoly prices. Most people do not realize that the government, through Medicare, has fixed medical prices for half a century and the results speak for themselves. At the same time, government has fed price increases by protecting monopolies set up by the drug companies and the American Medical Association. This is what government always does, and it wrecks any sector of the economy where this crony capitalist system is applied.

This post was published at Ludwig von Mises Institute on March 10, 2017.

9 Lessons From The Reagan Tax Cuts

A close look at the ’86 tax reform shows why tax reform may not get done this year. As BofAML’s Ethan Harris notes, “we are skeptical.” Significant tax reform creates winners and losers, which may make it hard to find a “coalition of the willing.”
Via BofAML,
Is it a done deal?
By some accounts, tax reform is more or less a done deal. After all, Republicans control both the executive and legislative branches of government so reform could pass without one Democrat vote. In particular, Republicans can use the ‘reconciliation’ process to avoid a filibuster and pass a plan with just 51 votes in the Senate. House Republicans already have a specific plan and the President has already suggested a less fleshed out alternative. The leadership in the House is planning to focus first on repealing the Affordable Care Act (ACA), then writing the tax reform bill after the spring budget passes and enacting the plan by the August recess.
We are skeptical: even with the Republican sweep last fall, tax reform could prove taxing. Any reform requires that some groups give up hard won tax breaks in exchange for lower rates. This creates a complex web of winners and losers, causing splits both across parties and within parties. Here, we draw nine history lessons from the 1986 tax reform.
Nine reasons tax reform is tough
#1 A proclivity for Swiss cheese: The US political system, with the strong influence of lobbyists, seems to have a natural tendency to add complications to the tax code. Loopholes had been steadily added to the tax system in the run-up to 1986 reform, and loopholes have been creeping back into the tax code ever since the reform. Also recall that the ’86 reform put the top rate at 28%, but it has since climbed back to 39.6%. Turning our ‘Swiss cheese’ tax system into ‘American cheese’ will likely be difficult.

This post was published at Zero Hedge on Feb 24, 2017.

Are Big Banks’ Dark Pools Behind the Run-Up in Bank Stock Prices?

The biggest banks on Wall Street, both foreign and domestic, have been repeatedly charged with rigging and colluding in markets from New York to London to Japan. Thus, it is natural to ask, have the big banks formed a cartel to rig the prices of their own stocks?
This time last year, Wall Street banks were in a slow, endless bleed. The Federal Reserve had raised interest rates for the first time since the 2008 financial crisis on December 16, 2015 with strong hints that more rate hikes would be coming in 2016. Bank stocks never do well in a rising interest rate environment because their dividend yield has to compete with rising yields on bonds. Money gravitates out of dividend paying stocks into bonds and/or into hard assets like real estate based on the view that it will appreciate from inflationary forces. This is classic market thinking 101.
Bizarrely, to explain the current run up in bank stock prices, market pundits are shoving their way onto business news shows to explain to the gullible public that bank stocks like rising interest rates because the banks will be able to charge more on loans. That rationale pales in comparison to the negative impact of outflows from stocks into bonds (if and when interest rates actually do materially rise) and the negative impact of banks taking higher reserves for loan losses because their already shaky loan clients can’t pay loans on time because of rising rates. That is also classic market thinking 101.
Big bank stocks also like calm and certainty – as does the stock market in general. At the risk of understatement, since Donald Trump took the Oath of Office on January 20, those qualities don’t readily come to mind in describing the state of the union.
Prior to the cravenly corrupt market rigging that led to the epic financial crash in 2008 (we’re talking about the rating agencies being paid by Wall Street to deliver triple-A ratings to junk mortgage securitizations and banks knowingly issuing mortgage pools in which they had inside knowledge that they would fail) the previous episode of that level of corruption occurred in the late 1920s and also led to an epic financial crash in 1929. The U. S. only avoided a Great Depression following 2008 because the Federal Reserve, on its own, secretly funneled $16 trillion in almost zero interest rate loans to Wall Street banks and their foreign cousins. (Because the Fed did this without the knowledge of Congress or the public, this was effectively another form of market rigging. Had the rest of us known this was happening, we also could have made easy bets on the direction of the stock market.)

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

Matt Taibbi: “Insane Clown President Trump Was Right About The Media”

While U. S. political journalist Matt Taibbi has made no bones about his dislike of Donald Trump… (via Rolling Stone a day after the election)
Most of us smarty-pants analysts never thought Trump could win because we saw his run as a half-baked white-supremacist movement fueled by last-gasp, racist frustrations of America’s shrinking silent majority. Sure, Trump had enough jackbooted nut jobs and conspiracist stragglers under his wing to ruin the Republican Party. But surely there was no way he could topple America’s reigning multicultural consensus. How could he? After all, the country had already twice voted in an African-American Democrat to the White House.
Yes, Trump’s win was a triumph of the hideous racism, sexism and xenophobia that has always run through American society. But his coalition also took aim at the neoliberal gentry’s pathetic reliance on proxies to communicate with flyover America. They fed on the widespread visceral disdain red-staters felt toward the very people Hillary Clinton’s campaign enlisted all year to speak on its behalf: Hollywood actors, big-ticket musicians, Beltway activists, academics, and especially media figures.
Trump’s rebellion was born at the intersection of two toxic American myths, the post-racial society and the classless society.

This post was published at Zero Hedge on Jan 15, 2017.

Buy C-R-A-P

We live in a modern world of acronyms and buzzwords, and the financial industry is certainly no exception. In fact, it may be one of the worst culprits, what with FANG, ZIRP, TINA, BREXIT, QUITALY, BRIC, etc. all entering the lexicon over the last few years. Yet, creating some catchy collection of consonants remains one of the most surefire ways to attract attention in this business since it, admittedly, makes for a great headline and gives strategists like us something fun to write about (‘fun’ being a relative measure). Well, now the new eye-catching acronym to watch, according to Tom Lee of Fundstrat is C-R-A-P – Computers, Resources, American Banks, and Phone Carriers – which are all levered to the investment recovery, inflation, and deregulation expected over the next year. Before I comment further on those recommendations, though, I want to point out that I like to follow Tom Lee’s thoughts because, like us, he lets the data do most of his thinking, and, like us, he was one of the few pundits last year who actually saw potential for the US stock market. He backed that up, too, with one of the highest S&P 500 targets among strategists for 2016 (2325), but now, according to Bloomberg, he has the lowest price target for 2017 among the fifteen strategists they track (2275), further proof that he doesn’t just parrot consensus numbers.
Reading between the lines of his comments, Lee does not see a substantial upside for the stock market as a whole in 2017, at least not without a pullback first, but he does believe a potential exists among individual areas of the market. This line of thinking is consistent with our view that passive indexing may be more frustrating for this type of investing environment because you will be dragged down by the underperforming sectors and the increased volatility may make it more difficult to hold onto positions long enough to achieve the eventual performance. We generally agree, too, that the C-R-A-P stocks should do well in the political and economic landscape that many expect on the horizon. If inflation does pick up, driven by fiscal stimulus and more robust economic growth, Fundstrat argues that the contemporaneous increase in wages will not hit technology company margins as hard given their reliance on more high-skilled workers, and we, too, continue to advise an overweight of Tech to benefit from the Computers sub-sector. The big acronym of 2015 and 2016, the so-called FANG stocks, may already be coming back into favor, as well, with Facebook Inc. (FB/$123.41/Outperform), Amazon.com Inc. (AMZN/$795.99/Outperform), Netflix Inc. (NFLX/$131.07/Outperform), and Alphabet Inc. (GOOG/$806.15/Outperform) all breaking out to new reaction highs last week.

This post was published at FinancialSense on 01/10/2017.

A Complete List Of What Trump Can, And Can Not Do, On Day One And For The Rest Of 2017

With the Trump inauguration just over 10 days away, attention has now shifted to what Trump will do the moment he steps foot in the White House, and as The Hill reported this morning, judging by his campaign promises, Donald Trump will be a busy man starting on his first day in the Oval Office: “Trump has pledged to take sweeping, unilateral actions on Jan. 20 to roll back President Obama’s policies and set the course for his administration. Many of Obama’s policies he can reverse with the simple stroke of a pen.”
The Hill then lays out some of the key agenda items in terms of Immigration, Environment, Lobbying, Trade and Healthcare.
The reality, however, is a bit more nuanced than captured in the report, and has to take into consideration not only what Trump’s intentions are, but how they would integrate with Congress, where simply structural limitations could put hurdles ahead of the Trump agenda.
So, for a more comprehensive preview of what Trump can – and can not do – both on day one, and for the rest of 2017, we present a recent analysis by Alec Phillips of Goldman Sachs (which, now that Trump has surrounded himself with Goldman alumni will be as critical when it comes to fiscal policy as Goldman was when it came to advising the Federal Reserve on monetary policy), which notes that the political agenda for 2017 is starting to take shape, with tax reform and Obamacare repeal seemingly at the top of the agenda.
Trump will be delighted to know that both items can be passed without Democratic support via the budget reconciliation process.

This post was published at Zero Hedge on Jan 9, 2017.

The Case Against Fed Reform

This week the 115th Congress was sworn in, and there are some indications that Fed reform may be on the agenda. The combination of populist anger fueled by Ron Paul’s Presidential campaigns and the 2008 financial crisis coupled with the repeated failings of the Federal Reserve to meet their projections has created a rare window for monetary policy to be both politically advantageous, as well as so obviously needed that even politicians can see it.
The question now is what sort of reform is on the table.
Congressional Reforms Last Congressional session saw proposals from both the House and the Senate.
From the House we have the FORM Act, which would require the Fed to adopt a monetary policy rule and explain to Congress whenever they deviate from that rule. The FORM Act also calls for an annual GAO audit of the Federal Reserve, doubles the number of times the Fed Chairman testifies before Congress, and makes some other tweaks to the makeup and protocol of the Federal Reserve Board. Since the FORM Act passed the House in 2015, there is a good chance we will see it resurrected in 2017.
On the Senate side, Banking Committee Chairman Richard Shelby has pushed for the Financial Regulatory Improvement Act. Not only does it lack a catchy acronym, but its reforms to the Fed are far more modest than the FORM Act. The meat of the bill focuses on changes to the Fed board. The head of the New York Fed would no longer be appointed the banks board of the directors, but would instead be nominated by the President and confirmed by the Senate – just like the Federal Reserve Chairman. It would also grant powers to the Fed’s regional presidents that currently only reside with the board of directors.
Though early drafts of the Senate bill called for the Fed to adopt rules-based monetary policy, this ended up being stripped from the final proposal due to Democratic opposition – largely because much of the Hill focus has been on the Taylor rule, which many Fed advocates fear is too restricting.

This post was published at Ludwig von Mises Institute on January 5, 2017.

TO REALLY ‘MAKE AMERICA GREAT AGAIN,’ END THE FED!

Former Dallas Federal Reserve Bank President Richard Fisher recently gave a speech identifying the Federal Reserve’s easy money/low interest rate policies as a source of the public anger that propelled Donald Trump into the White House. Mr. Fisher is certainly correct that the Fed’s policies have ‘skewered’ the middle class. However, the problem is not specific Fed policies, but the very system of fiat currency managed by a secretive central bank.
Federal Reserve-generated increases in money supply cause economic inequality. This is because, when the Fed acts to increase the money supply, well-to-do investors and other crony capitalists are the first recipients of the new money. These economic elites enjoy an increase in purchasing power before the Fed’s inflationary policies lead to mass price increases. This gives them a boost in their standard of living.
By the time the increased money supply trickles down to middle- and working-class Americans, the economy is already beset by inflation. So most average Americans see their standard of living decline as a result of Fed-engendered money supply increases.

This post was published at The Daily Sheeple on DECEMBER 2, 2016.