Frozen Contract Terms

In an effort to make housing more affordable federal regulators have done the opposite, but this cost is hidden by the lack of innovation which has locked the market for housing. To paraphrase Glenn Reynolds, by subsidizing the markers of success they have raised the cost in ways even they do not understand.  If you cannot afford a house one would be better served to rent than to add debt you cannot handle.  Somebody pays.

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Monetization vs Debt

If the deficits are not monetized then they are added to the debt.  While this does not add to the current inflation pressures, at what point and how will this affect our monetary balance?  Inflation historically has been a seductive solution to excess debt.

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Sir John Cowperthwaite

“But no computer has yet been devised which will produce accurate results from a diet of opinion and emotion.”

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The Old New Deal

“Regardless, measured against the intended point of the New Deal—getting us out of the Great Depression—the New Deal was a failure. Indeed, many people—I’m one of them—would argue that the New Deal prolonged the Great Depression. But while the New Deal was a policy failure, it was a huge political success.”

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The Fourth Branch of Government

“During my 12 years in government I often saw career bureaucrats push their preferred policy passions irrespective of agencies’ rules, federal regulations or the law.”

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The Gilded Myth

While the period of industrial expansion did create both economic and political dislocations, the benefits were often overlooked in our history.  The restraint on concentrations of political power in our constitution applied largely to economic power in an agrarian economy but this diverged in the industrial era.  The great dilemma of the progressives was how to address the concentrations of economic power without losing the restraints on the concentration of political power.

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FDR’s Tax Secret

“In 1936, after FDR helped raise the top income-tax bracket to 79 percent, the revenue collected from income taxes dropped to $674 million, as rich investors withdrew their capital from taxable investments. The excise taxes, which hit the middle- and lower-income groups with full force, were over $1.5 billion. These new excise taxes, much more than income taxes, were helping fund the New Deal programs.”

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The Dirty Little Secret of Tax Policy

This is the biggest lie perpetuated from the left; that our vast social spending can be funded by only taxing the wealthiest 1%. The math just does not work. As Thatcher so famously noted, “You eventually run out of other people’s money.”

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The Limits of Good Intentions

“Good intentions are fine, but good intentions and a $27 trillion economy will get you a lot farther than good intentions alone.”

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You Have a Choice Until You Don’t

If we do not do something about our national finances, then we will reach a point at which the debt ceiling is no longer a matter of congressional action but a matter of what the credit markets are willing to bear.”

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Political Observations 2023 01 09

When the parties are this closely divided, small, sometimes extreme elements can exercise far more power than their numbers would justify.  The solution is either to win with larger margins to relegate extreme minorities to the sidelines or to secure strong party leadership that can control errant minorities.  The latter, at the moment, is like putting the toothpaste back in the tube.  We apparently are one of the few countries where the political parties exercise no control over who runs under the party label.

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Economic Thoughts 2023 01 08

Firewalls serve to restrain complex and tightly coupled systems; small recessions are preferable to systemic failures.  The political wish to avoid recessions by neutering small corrections only paves the way for greater failures.

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Seduced by Numbers

“Science cannot tell us how to value things,” Ms. Thompson says. “The idea of ‘following the science’ is meaningless.”

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Bagehot and the Fed

“The Federal Reserve and other central banks have done the opposite. They take any form of collateral and charge little to no interest, thus prolonging the presence of bloated and ill-managed enterprises, denying savers the benefits of prudence, destroying productivity, and burdening public balance sheets with the debts of functionally dead organizations.”

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Political Thoughts 2022 10 22

The independents increasingly decide elections but are muted in the primaries. We nominate candidates in the primaries that fare poorly in the general election, voting based on who they are not rather than who they are. This dynamic leads to political volatility.

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The Dangers of the Academic Bubble

Many of the departments of higher academia are plagued by a lack of intellectual diversity.  The atmosphere of ‘wokeness’ and cancel culture is just a form of intellectual McCarthyism.

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Republicanism and Aristocracy

The third aristocracy identified by McLaughlin is a cultural aristocracy embedded in media, entertainment, higher education, and increasingly in corporations and public school.  To the extent that this aristocracy projects values and rules that are in conflict with a large portion of the population, there is a reaction similar to the reaction to the previous political and economic aristocracies.

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Taming the News

Successful journalism is less likely to be measured by objective truth, clarity, and illumination than by clicks and shares. Clicks and shares are generated by outrage and fear mongering. If your first response to an article is outrage or vindication, put it aside for a few days; you are being played.

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Political Realities

Progress emanates from the work of a very few, unpredictably and contrary to conventional wisdom. The protection of freedom and individual rights for these few benefits us all more than the rights accruing only to the majority.

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The Evolution of Republicanism

We will always have elites in a technical world and we are free to choose the elites we respect.  What has happened is a segment of elites  does not return the respect, inviting contempt.  When these elites lose respect and this leadership becomes entrenched and unaccountable, the people or the new republicanism seek clumsy tools to influence these institutions.   This is a sound warning from the author.  

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