LyrArc Article Gist
A small town mayor who says he will fight with Biden for workers and families in every county in Pennsylvania wins the Senate seat against aTV health show host favored by Mr. Trump. The scrappy fight put up by Democrats on their own in different parts of the country is the main takeaway from this election for control of running 36 of America's 51 states and control of Congress. Fighting an election with major legislation on controlling healthcare costs and for renewable energy, infrastructure investments, Mr. Biden and fellow Democrats was forced into a back to the wall fight because of price increases from Russia's war in Ukraine. Voters took notice not falling for the message on inflation alone that is being tackled by the Fed's Jerome Powell, giving room for seeing the larger picture.

LyrArc Article Gist
The Fed's Jerome Powell cuts interest rates by quarter of a percentage point on November 7, 2024. The Fed cut its short term interest rate target by quarter of a percentage point to 4.5% from 4.75% after a September rate cut of half a percentage point.

LyrArc Article Gist
This WSJ editorial shows a 3.1% decline in purchasing power lost to inflation since president Biden took office, average hourly earnings declining from $11.39 to $11.03. Yet it is also true that inflation has been cut in half in May 2023 to 4% compared to a high of 9% in 2022. Inflation is much higher in the UK and Europe. President Biden also passed the Inflation Reduction Act, intervened in energy markets to lower oil prices with policies to reduce prices for Russian oil. Jerome Powell at the Federal Reserve is aggressively tackling inflation. Investments in manufacturing in the US and in infrastructure will increase jobs and strengthen the US economy in 2023-2025. This was given the name Bidenomics yet it is about president Biden and policymakers looking carefully at what works to increase jobs, increase wages, and support workers and families, and build American manufacturing and infrastructure for a strong economy.

LyrArc Article Gist
The US Federal's half percentage point interest rate cut bodes well for stocks and bonds in the US, says this report in WSJ, as it reduces the burden of interest rates on small business that has a part of its debt in floating rates. The default risk component of rates also shrinks for large and small companies. A lot depends on how much the US is investing in manufacturing, in chips and science, in education, in infrastructure that reduces the costs to business and in its industries, which is the ultimate driver of growth. In this sense the Biden administration and Jerome Powell's Fed have accomplished a remarkable deal in the difficult period of the pandemic's four years 2020-2024. Much remains to be done yet this is a big deal, and the next president can leverage these strengths to set the US on the right path, the Way Forward for America.

LyrArc Article Gist
Potential Treasury nominee Kevin Warsh is given the possible role at Treasury plus appointment as Fed chairman after 2026 when Jerome Powell retires. At 35 years Kevin Warsh was the youngest governor of the Federal Reserve, America's central bank, appointed in 2006 by George Bush. At the time his appointment was criticized for lack of experience- Warsh comes from upstate New York and went to school at Shaker School in Latham, then Stanford, in economics and a JD at Harvard, followed by 7 years at Morgan Stanley. He was executive secretary of the National Economic Council in 2002. During the bank financial crisis of 2009 the lack of macro regulation led to failure of investment banks. Warsh was able top save Morgan Stanley and he acted as an avenue of information from banks to the Fed.

Warsh left the Fed in 2011 and returned to public service in 2016 when Trump made his first run for president as an adviser to DJT. 

LyrArc Article Gist
U.S. Federal Reserve officials are likely to take a wait and see approach based on incoming data following a likely rate increase in December 2018. Jerome Powell, Fed chairman and other members are likely to want to see how the economy is holding up from moves already taken. Under this evolving data dependent approach the Fed will step back from the predictable path of quarterly rate increases of the last 2 years.

Inflation has softened in the last quarter of 2018 with falling oil prices, reducing the Fed's sense of urgency. The dents in the stock market have not changed the situation of low unemployment and strong growth.

LyrArc Article Gist
To help growth in the present situation of the pandemic the U.S. central bank is adopting a new policy of letting inflation float above 2%. Interest rates will be kept low for a longer period to support jobs and growth. Jerome Powell the head of the Federal Reserve announced the new policy.  Powell is mainly concerned about jobs. He sees a lot of difficulty in the services sector as jobs are lost. It will take time for this sector to recover. This is "a strategy where undershoots are not forgotten" Powell told the Jackson Hole gathering, meaning that the Fed in contrast to current policy will adopt a strategy of staying with a goal of full employment till the people who are lagging behind in regaining employment are back on the boat with the rest. In the past these people were left to fend for themselves, even when the loss of work was due to no fault of their own- crises from banks overlending and losing money as in 2009, or today because of a virus from Wuhan.  This is the part of economic policy that resonates in the country today and it shows that the Fed is on board in the effort to revive the American economy putting the people first as in the early years after the second world war when national unity prevailed under both Truman and Eisenhower. Powell uses both economic jargon about "a long tail" and common sense language in a way few central bank presidents have in America. He says the Fed is looking at "a long tail of a couple of years at least" during which he says the Fed will "stay with these people, the millions of people still looking for work." No mathematical formulas will be used. Just plain common sense and putting the people of America first, which is just what is needed. Mathematical economics have taken America nowhere. ...

LyrArc Article Gist
Greg Ip of the WSJ calls the US economy's growth "impressive," and "quality growth." This was always evident throughout the last 24 months. It was presented in terms of cost of living crisis at times but it was always evident that something remarkable has been achieved by president Biden and Fed chairman Jerome Powell, the US leading all the economies in the world by far. 

LyrArc Article Gist
A supply chain crisis, shortages of coal and oil are affecting major world economies. The Guardian looks at the economies of Britain, the US, Germany, Russia and Australia. Inflation is above 4% in Germany for the last month. Shortages of workers is affecting most economies. Ports are filled with container ships that have not downloaded their shipments because of a lack of workers. There were a record 10 million job openings in the US mostly in the restaurant and entertainment industries. Low wages have led many to reconsider their careers during the pandemic, a phenomenon called the Great Resignation. Other people have dropped out of the workforce because schools have not reopened and there is a lack of good affordable childcare. The chairman of the US central bank Jerome Powell, says "It is frustrating to acknowledge that people getting vaccinated and getting Delta variant under control remains the most important economic policy we have. It is also frustrating to se the bottlenecks and supply chain problems not getting better- in fact at the margin getting a bit worse." ...

LyrArc Article Gist
US president Biden makes three nominations to the US central bank, the Federal Reserve. Lisa Cook's nomination to the central bank is confirmed in the Senate 51-50. Following the appointment of Lael Brainard to the central bank as vice chairwoman, president Biden has nominated Cook, the first Black woman on the Federal Reserve board from Michigan State University. He has also nominated Mr. Jefferson of Davidson College to the Federal Reserve board. A fourth nomination is of Michael Barr, a law professor, as the Federal Reserve's vice chair of supervision. Lael Brainard served under president Clinton and is on the board of the Fed since 2014. She was Treasury Under Secretary for International Affairs from 2010 to 2013, coordinating economic policy at G-7 meetings during that time. Jerome Powell, the current chairman of the US central bank is being renominated as chairman by president Biden after Powell's term expired in February. Lisa Cook's research focus was on policies that promote broad economic opportunities for women and racial minorities. She served on the Council of Economic Advisors under the Obama administration, and has worked at the Treasury Department. With Janet Yellen at Treasury and Jerome Powell and Brainard at the US central bank there is a shift to policies that will promote president Biden's agenda for his first term to invest in infrastructure, supply chain renewal and working class families in America. ...

LyrArc Article Gist
Inflation is about too much money chasing too few goods or services. Paul Krugman, economic expert, says in the NYT that this inflation episode in 2021 is still he thinks transitory, as does the Fed's Jerome Powell. It is Krugman says a demand pull situation in which higher demand is  a result of the lockdowns easing and pent up consumer demand being released, just when the productive capacity of the country is affected by about 4 million fewer workers in factories and other places. The supply is crimped also by supply chain bottlenecks with covid affecting supply from countries in Asia also with fewer factories operating. Added to this is the whole logistics chain near Long Beach California moving ever so slowly because of fewer workers, and ships lined up all the way out to sea. The Fed chairman Powell thinks this is what is happening. Krugman says this reminds him of the 1946-48 episode of inflation after the war, when the disaster of war was followed by peace time 1946 and the release of pent up demand like today. At the same time in 1946 factories were still not fully operational for consumer goods after bombing in Europe and war time conversion in the US. The result too much money chasing too few goods available. In this situation Krugman says a calibrated effort that is based on new information is needed with moderate action, very small rate increases in 2022 so that inflation signals are sent out by Fed but not in a way that would disturb the long term trajectory of the economy for growth. After the pandemic has hit so many Americans so hard. Action that would preserve the long term strength and productive capacity, and technological competitiveness of America during this period of renewal. ...

LyrArc Article Gist
Krugman says in NYT that inflation is receding and its causes lie mainly in pandemic related supply chain issues not fiscal efforts to fix dilapidated infrastructure, invest in fighting climate change, or help for needy workers and families.  He looks at Fed chair Jerome Powell’s discussion on inflation and this he says shows that fiscal policy or government spending to fight the pandemic and US needs for infrastructure and science/chips played at most a distinctly secondary role. What Krugman does not say is that this does not mean that inflation is not an issue for many families living from paycheck to paycheck. Harris clearly spelled out a Plan for housing costs and cost of food and this is the kind of effort needed to tackle this issue secondary or not in astatistical sense. Also not given recognition is that the government spending is changing the very nature of the US economy by creating more potential for it to grow till 2030 in a way that would not be possible if this investment by president Biden was not wisely made. One has only to look at Germany to see its crumbling rail system and failing infrastructure to see that what Biden did right and Merkel did wrong. ...

LyrArc Article Gist
Inflation is receding as an issue in the 2024 elections as the CPI index dropped below 3% in July as reported by the Labor Department. It was 2.9% lowest since 2021. Greg Ip says when Trump is saying bacon costs 5 times more now he needs to find another supermarket. That is the joke as Trump is really getting ripped off. Ip says bacon prices are up 18% since 2020 when Biden took office. Trump says at rallies grocery prices are up 70%, Ip says fact correction -up 21% since January 2021 not 70%. Trump says gas prices are $5.00 a gallon. Fact correction- gas prices are $3.75 a gallon and falling, says Ip. Trump wildly exaggerates. Trump says he will cut energy and electricity prices by 50% in 12-18 months. His answer "Drill Baby Drill." Experts cited by Greg Ip say even if new offshore and onshore leases are given, increase in supply is marginal and years away. Gas prices are determined by the world price determined by OPEC and Russia, says Ip.  Trump will increase inflation says this report because of tariffs he plans of 60% on imports from China and 10% from other places. That would increase inflation by 1.4 to 1.7% say analysts. Greg Ip of WSJ offers more clues. Inflation linked bonds see inflation dropping to 2.2% in 2025 instead of 2.6% predicted earlier. Jerome Powell at the US central bank the Fed and president Biden hav done their job well and are not letting up, continue to work on it diligently every day. ...

LyrArc Article Gist
Much of the inflation reduction actions were taken by the US Federal Reserve as the central bank of the Nation and by president Biden in passing the Inflation Reduction Act and investing in growing the economy. All this may be jeopardized by the action of a Trump administration limiting the independence of the central bank. The support for crypto currency by Trump creates more risks to the economy. Additional risks are posed by the views expressed in Project 2025 on the US central bank. It is stated that the financial stability mandate be removed, that employment stability be removed and its regulatory role be effectively taken out. A commission to be appointed to look at alternatives to the central banking role of the US Fed. There are inflationary episodes and banking crises yet they stem from poor behaviour of banks as private players (2009 financial crisis) and price gouging by companies and firms and are not because of the central bank. There are also episodes of poor management  which reflected the culture of that period such as Libertarian culture under Greenspan. As in management in private industry firms good or poor managers make adifference. The institution created of the central bank around 1910 comes from the crises that happened in the period before that  and how it evolved into its postwar role. This includes the Great Depression when it did not have its regulatory, financial stability and employment role. Tampering with the basic structure that has evolved over 100 years of experience would cause lasting damage to the US economy and expose it to hidden risks. This would put a severe burden on the Nation after the loss of one million lives in the pandemic that just happened, the cost of living crisis, and the severe impact that decades of loss of local manufacturing have placed on communities across America- which both the US Federal Reserve under Jerome Powell and president Biden have fought so hard to tackle. ...

LyrArc Article Gist
With slow growth in the U.S. the Federal Reserve chairman Jerome Powell says it will take a wait and see approach to interest rates.

LyrArc Article Gist
 Americans in the southern states forget that president Kennedy made the famous statement about "a rising tide lifts all boats" in Arkansas, a poor southern state, saying that America must invest in all regions in people in all parts not just in well off northeastern states. In a handful of southern states expanding Medicaid to about $43,000 or 138% of the federal poverty level for a family of four is now being taken up by Republican leaders who show new openness- in Alabama, Georgia and Mississippi. Noah Weiland -of NYT looks at one particular battle -between Democrat Governor Laura Kelly in Kansas and Republican Speaker Hawkins- in Topeka, Kansas, where the fight goes on. Hawkins calling it the greatest Ponzi scheme devised and Kelly telling this reporter that she has included a work requirement so there is no excuse for not doing this. Republicans are coming around and so are states in other places. Missouri, Nebraska, and Oklahoma, states that lie next to Kansas have approved this through ballot initiatives. The point here is that in the years as America comes out of the pandemic there is and should rightly be a realization that this is different, that the children of low income families deserve as equal a chance as their higher income fellow Americans, that depriving them of good medical care makes America a weaker country. As Jerome Powell of the US Fed said in Stanford today about Kennedy's expression of "lifting all boats," it is just this that is needed today. It will be the No.1 election issue in Kansas in 2024, says Governor Kelly. The Republicans are also having second thoughts and are now just face saving. Consider that the Kansas Health Institute a research group, says 70% of the people becoming eligible for Medicaid expansion are working. Many are restaurant business workers who cannot provide proper medical care to children who form the next generation of America. And hiring in rural hospitals would expand for health workers instead of layoffs in southern states lifting financial strain on rural healthcare with additional Medicaid funds. This helps rural America when it needs it most. ...

LyrArc Article Gist
The legacy of U.S. president George H.W. Bush is a four year presidency that benefited from the growth under president Reagan and low inflation but was cut short in a loss to Bill Clinton in 1992, Persistent budget deficits and high unemployment were seen as a result of the supply side deficits Mr. Bush supported as vice president under Reagan, but derided as "voodoo economics" as president breaking his pledge of no new taxes to cut the deficit. The collapse of the savings and loan banks with poor lending happened during his administration, and was handled by Treasury officials including current Fed chairman Jerome Powell. Mr. Bush is chiefly remembered for his negotiating the issues leading to the fall of the Berlin Wall and reunification of Germany. His handling of the Iraq war left a unstable situation in Iraq that led to a major problem for his son George Bush who became president after Bill Clinton, leading to a second and protracted costly war in Iraq. The effects of that conflict led to the changes in the Republican Party with its new leader Mr. Trump and a U.S. non-interventionist policy in foreign conflicts. Greg Ip points to the defict reduction as a positive contribution under the elder Bush, yet much of these gains were wasted in the costly Iraq conflict with U.S. hasty intervention. ...

LyrArc Article Gist
The US Fed under Jerome Powell stress tests of 31 banks for 2024 shows the banks can withstand a rise in unemployment to 10% and 36% drop in house prices. This is relevant now that the new administration of DJT makes another effort to correct the huge trade imbalance with China, Mexico and Canada, which itself is destabilizing in the long run and needs to be addressed. The first term of DJT failed to correct the imbalance with new tariffs kept in place by the Biden administration. This is not just one's imagination, reports suggest China has poured $230 billion of subsidies into its EV industry since 2003 mandate given by premier Jen Biao to dominate that industry. And now has capacity of 20 million car production a year, twice the domestic demand in gasoline cars, wanting to send the surplus production to the US and Europe. This isn't the 1930's type of tariffs, it is simply to get a fair even playing field for trade, where no one side is massively subsidizing and dumping which is one of the principles of WTO free trade that is being broken by China and Mexico. Specifically the anti dumping clause in Article 6 of the 1994 GATT agreement on free world trading mechanism to ensure free and fair trade. ...

LyrArc Article Gist
Jerome Powell, the new head of the U.S. Federal Reserve values continuity in policy, suggesting that the U.S. central bank will gradually raise interest rates in 2018. A raise is expected at the March 2018 Fed meeting. Powell said at his swearing in ceremony- "While the challenges we face are always evolving, the Fed's approach will remain the same. We are in the process of gradually normalizing both interest rate policy and our balance sheet with a view to extending the recovery."  Five interest rate increases since December 2015 have taken the short term benchmark rate to a range between 1.25% and 1.5%. During 2018 3-4 rate increases are expected.

Powell is seen as a consensus oriented leader with a focus on careful evaluation and rigorous study. Powell is pushing for a continuation of the Fed's policy to improve transparency, and responsiveness. 

LyrArc Article Gist
Greg Ip in the WSJ says president Biden's popularity has not surged because of lack of results in the fight against inflation. Yet inflation has been cut in half as reported in the WSJ recently, with May inflation of 4% in the US being about half of what it was at its peak of 9% in 2022.  Inflation is much worse in Europe. Biden policies that helped fight inflation included the Inflation Reduction Act to control health costs, the policies to keep Russian oil below a certain level that reduced oil prices to $75 a barrel, and the sequential interest rate increases by Jerome Powell at the Fed. The long term benefits of increased investment in manufacturing in the US for jobs growth, and competitive policy to gain US leadership in many technologies also provide for sound growth in the long term. 

LyrArc Article Gist
Some of the statements on the IMF Blog on Inclusive Growth raises the question-Does the IMF, the International Monetary Fund, as an American institution funding developing countries, and economists, grasp what people find troubling in 2022? One of the lessons of the economic crises for families and workers in the US and other countries is that wisdom, a grasp of the soul of a country and its people through the thinking of its founders, and common sense, should drive managing of economies, with a knowledge of how economies work- not economists. Some of that is already happening. America's central bank is headed by Jerome Powell who has wide experience and has knowledge of how the economy runs, is not an economist. He was chosen by president Trump and continues to have the confidence of president Biden for this very reason. Some of the statements on the IMF economic blog are- "Why jobs are plentiful and workers are scarce" Jan 2022 "In the US and UK recent labor market the puzzle, can be partly explained by mismatch, the pandemic's effect on women and older workers leaving the work force." The Reality Wages for teachers are depressed compared to workers in the financial and economics industries, in a frighteningly disproportionate way. When it comes to logistics, hospitality, leisure and restaurants industries workers were paid poorly for what is hard work and long days. In case the IMF economists, and economists at companies, missed this it was called the Great Resignation, people simply choosing to reject the conditions that were handed down to them by the financial industry and economists who built the economic structures of recent decades. Women leaving the workforce are faced with issues of mental health coping with added responsibilities of children at home for the two years, loss of income and widespread mental health problems. The word mental health may be beyond the grasp of economists and the financial industry, yet it is the one of the biggest problems for people. Another pernicious effect noted on the pages of the WSJ is that young white men are dropping out after school because they cannot afford college in alarming numbers. Leading to the kind of discontent for workers and families that president Biden is struggling to address. On IMF Blog- "IMF Podcasts: The Year in Review" Dec. 2021 "The past year has brought us new challenges even as the old ones persist. If anything, the ongoing pandemic has taught us to think differently abut tackling the challenges and questions when it comes to thinking about big issues such as climate change, gender equality, inflation and economic measurement." The Reality Climate change lumped in with economic measurement and inflation. The floods, fires, river and reservoir water levels affecting access to basic life supporting water, drought, all over the world are of a magnitude that is missed entirely.The response to a challenge of this type requires the kind of leadership that president Biden has provided for the world with his $360 billion climate change bill as just the first step of many, and  comprehensive policies covering all aspects of the climate crisis. ON IMF bog- "How Domestic Violence is a Threat to Economic Development." "Stopping violence against women is not only a moral imperative, new evidence shows it can help the economy." The Reality Domestic violence hurts children growing up in such households. It is not so much a moral imperative as it is bad for men, women and children. So many things are wrong about it and it is made worse in conditions of low wages and poor working conditions in poor neighborhoods lacking education. These neighborhoods are also affected by lack of healthcare and the opioid crisis and mental health issues. Not investing in education and healthcare in these communities is what is simply wrong, and which the founders of America as a nation, particularly Lincoln, would find appalling.   Relationship between Capital (the Financial Industry) and Labor (Workers and Families) On the basic issue of the relationship between capital and labor, the IMF and the financial industry, economists, and the economic structure they built in recent decades, have simply got it wrong. It violates both common sense and wisdom, and violates the spirit of the founders particularly Abraham Lincoln. This is what Abraham Lincoln had to say on Upward Mobility, the ease with which each generation can do better than the one before it, as critical in the fight to save the Union. This is from the Annual Message to Congress Dec. 3, 1861, at the start of the Civil War. That upward mobility has been lost in the US with ideas that "place capital on an equal if not above labor, in the structure of government," for the last three decades in the US after the early post war period of Truman and Eisenhower, Kennedy-Johnson.  And Lincoln says this about a hired laborer being fixed in that condition for life, or of future generations of that hired laborer facing disabilities and burdens, similar to the loss of upward mobility for the people today. "Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences based on them are groundless." "Labor is prior to, and independent of capital. Capital is only the fruit of labor, and could never have existed, if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are worthy of protection as any other rights." "Again: there is not, of necessity, any such thing as the free hired laborer being fixed to that condition for life. Many independent men everywhere in these states, a few years back in their lives, were hired laborers. The prudent penniless beginner in the world, labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires another new beginner to help him. This is the just, and generous, and prosperous system, which opens the way to all- gives hope to all, and consequent energy, and progress, and improvement of condition to all." Lincoln even offers this warning- No men living are more worthy to be trusted than those who toil up from poverty- none less inclined to take, or touch, aught which they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which if surrendered, will surely be used to close the door of advancement against such as they, and to fix new disabilities and burdens upon them, till all of liberty shall be lost." US president Biden has these ideas in mind as he struggles with one piece of legislation after another to restore what once was, to open the door of advancement, to remove these disabilities and burdens that Lincoln speaks of, and in so doing restoring liberty.   ...