The happiness of life is made up of minute fractions
the little, soon-forgotten charities of a kiss or smile,
a kind look,
a heart-felt compliment,
and the countless infinitesimals of pleasurable and genial feeling.
Samuel Taylor
Pethokoukis is a Mixed Bag
I added Mark Perry's Carpe Diem blog to my blogroll before it became a part of the AEI portal. Among other things, you won't find a lot of Fed bashing by site bloggers, at least from most of the posts I've read there. I think price inflation measurement is problematic--and expansive government policies have had a lot to do with that (especially in food, rent, energy, and college costs). I've often applied what I call my "Sam's Club" test. I often buy certain bundle items--maybe it's a box of artificial sweetener, a bag of apples, tea bags, eggs, etc., and the next time I go to repurchase I find the cost per item bundle is up maybe as much as a $1 or more. Still cheaper than I would pay at Safeway for smaller quantity packaging, but Safeway has better selection. One thing is sure--the meager interest I earn on savings does not keep up with my loss in purchasing power. And that is directly due to interest manipulation.
I don't buy for a second the argument that raising interest rates, say, up to a minimum of 3%, will collapse the economy; we've emerged from past recessions with nonzero interest rates. We are nearing the fifth year anniversary of the economic tsunami; homeowners aren't paying near-zero interest, corporations aren't--and most dividend-paying ones aren't at near-zero yields either. We have had recoveries despite nonzero interest rates. What this policy does is shift wealth from savers to debtors, which is morally unconscionable and unsustainable in the long term.
Nevertheless, I do agree with this post arguing that Fed printing is in the form of excess bank reserves, which does not trickle into the economy unless lent out--but this is confounded by the policy of the Fed paying interest rates on reserves. I get the general point; the idea for the Fed is to regulate lending like a thermostat--raise interest to discourage excess lending, but the current policy is more pushing on a string, like paying a farmer not to grow crops; at the same time, the Fed is trying to stoke speculation into equities like an Interest Nazi: "No interest for you savers!"
A sample perplexing post by Pethokoukis is "Is the cost of servicing US debt really ready to explode?" The basic point by Pethokoukis is that a rising interest is an artifact of a growing economy as businesses compete for resources to expand operations, etc.--and a growing economy fills tax coffers which will offset any incremental interest expense. There are a number of points here. First, a growing economy hopefully (given a thrifty Congress and President--good luck on that) would reduce some social relief spending. But a lot depends on the nature of retired bonds and market rates. (E.g., if old debt bears a higher rate than new rate, all is good.) But there seems to be a Keynesian assumption in the background that inflation is a good thing--and of course inflation eats away at the value of a debt security, a game where the debtor gains at the expense of the lender. And let me point out that we have experienced both high inflation and high unemployment, e.g., the latter 1970's. The interest expense grows both horizontally (the debt amount) and vertically (the interest rate). Conservatives want to lower that organically: (1) spending cuts and pay-down on the debt and (2) sound money policy and related pro-growth government policies (e.g., relaxing natural resource exports). I agree with Pethokoukis that increasing progressive tax rates is a counterproductive way of lowering the deficit, but I would argue shifting the tax burden towards consumption would moderate manic peaks and valleys. Second, I'm not sure that government research is quite the high-multiplier Holy Grail of government spending he thinks it is. Other than certain military concerns, I think most of that can be privatized.
So the problem is that you could run into a problem like Bernanke faced where he raised interest rates one too many times to cool down the overheated housing market--when I and others would have rather seen him crack down on mortgage lenders and real estate speculators exploiting artificially low credit rates--and we saw collateral damage across the economy. We are still on the hook for higher-rate bonds during recessionary periods, we haven't run a balanced budget in a decade, and it will be even harder balancing the budget given increases in relief spending. And keep in mind we have something like $85T in unfunded liabilities which will inevitably eat up the federal budget and displace other budget priorities.
Pethokoukis also suggests that the Fed QE unlimited has only a modest effects on intermediate-length bond rates. I think he's trivializing the impact; it doesn't explain the market's adverse reaction to Bernanke's comments. For one thing, there's a lot of uncertainty about the overall effects once the Fed shifts to more traditional (stable money) role. We will probably see ripple effects throughout the credit market to maintain a spread of comparable risk, and some financial institutions could find themselves with compressed spreads and margins. I really haven't heard bankers say that they would be making a lot more loans if the Fed would just take those illiquid bonds off their hands.... This strikes me more as central planning hubris.
Mostly, I'm disappointed to see Pethokoukis buying into the Chicken Little arguments of those enabling Barack Obama's spending intergenerational war. I give him kudos for not buying into the trillion dollar coin gimmick but he seems to be influenced by other progressive talking points. It seems obvious to me that "investment" in government bureaucrats is equally wasteful across federal agencies, and a flat spending cut is preferable than picking winners and losers for the federal teat.
But Pethokoukis also writes some good stuff. Take "Is ‘Bladerunner with food stamps’ America’s future?" I'm more of an optimist than these doom-and -gloomer, neo-Malthusean, Luddite types thinking we need to micromanage Adam Smith's "invisible hand"; it's time for spring cleaning the government, stripping out pushing-on-a-string, unknowable regulatory nonsense, overhauling an opaque tax system, etc. I think the Mead and Lindsey suggestions are generally excellent, most of which are fully consistent with policies I've promoted in the blog. I might squabble about education intervention; I think we might redeploy education spending to needs-based subsidies in a privatized competitive education system. But it does show how much more compassionate conservatives and libertarians are to progressives whom want to stay the course in decades of wasted, ineffectual government spending programs.
Cool Science: 3D Laser Printing of a Tracheal Splint for Baby Boy
From lifenews:
Every day, their baby [Kaiba] stopped breathing, his collapsed bronchus blocking the crucial flow of air to his lungs. April and Bryan Gionfriddo watched helplessly...They found hope at the University of Michigan, where a new, bioresorbable device that could help Kaiba was under development. Kaiba’s doctors contacted Glenn Green, M.D., associate professor of pediatric otolaryngology at the University of Michigan.
Green and his colleague, Scott Hollister, Ph.D., professor of biomedical engineering and mechanical engineering and associate professor of surgery at U-M, went right into action, obtaining emergency clearance from the Food and Drug Administration to create and implant a tracheal splint for Kaiba made from a biopolymer called polycaprolactone. On February 9, 2012, the specially-designed splint was placed in Kaiba at C.S. Mott Children’s Hospital. The splint was sewn around Kaiba’s airway to expand the bronchus and give it a skeleton to aid proper growth. Over about three years, the splint will be reabsorbed by the body.
“It was amazing. As soon as the splint was put in, the lungs started going up and down for the first time and we knew he was going to be OK,” says Green.Porcupines and the Right to be Left Alone
Sen. Paul Wants an End to Backdoor Politics As Usual: Thumbs UP!
John McCain continues to annoy me...
Slick Barry Obama Has Stained the Presidency
There is no going back to "hope-and-change" Obama. The trifecta of scandals leads to the improbable view of an Obama whom is so clueless that he knows more about a pop diva's travel plans to Cuba than what is going on in his own Administration or a more arrogant, sinister Teflon President of hardball Chicago-style political street smarts whom surrounds himself with minions willing to take a political bullet for him, whom unilaterally cherry-picks laws he'll enforce, abuses the rule of law by manipulation of administrative discretion, and bypasses the Constitution with executive orders when the Congress doesn't rubber-stamp his political objectives. Even after his last election, he remains in full campaign mode. If he spent half as much time being President as he does playing golf and attending fundraisers, he might actually get something constructive done.
Mark Steyn has penned a good opinion on this "wink and a nod", "three wise monkeys" President ("pay no attention to the man behind the curtain, the Wizard of DC"):
In April last year, the Obama campaign identified by name eight Romney donors....That week, Kimberley Strassel began her Wall Street Journal column thus:
Try this thought experiment: You decide to donate money to Mitt Romney. You want change in the Oval Office, so you engage in your democratic right to send a check.
Several days later, President Barack Obama, the most powerful man on the planet, singles you out by name. . . . The message from the man who controls the Justice Department (which can indict you), the SEC (which can fine you), and the IRS (which can audit you), is clear: You made a mistake donating that money.
Mr. VanderSloot is big enough, just about, to see off the most powerful government on the planet. Most of those who’ve caught the eye of the IRS share nothing in common with him other than his political preferences. They’re nobodies — ordinary American citizens guilty of no crime except that of disagreeing with the ruling party. Yet they were asked, under “penalty of perjury,” to disclose the names of books they were reading and provide the names and addresses of relatives who might be planning to run for public office — a kind of pre-enemies list. Is that banana-republic enough for you yet?If you really believe Slick Barry is the innocent victim of overzealous supporters whom didn't understand a President's attacks against the Tea Party and political adversaries and how they might address those priorities at the operational levels of government, then there's a High-Speed Railroad to Nowhere he wants to build with your tax money (and that of future taxpayers).
Stop the Anti-Business Zoning Madness
Spotlight on a Charity in Moore, OK (Tornado Relief)
For more information on Mercy Chefs (motto: "'Just go feed people' (James 2:16) is our call", see here.
We met Kellen yesterday. He is 8 years old and in the second grade. He was delivering cold water to every volunteer he could find on and around our site.
We asked him his name and why he was being the water boy...his response was "I don't have school anymore, my school was destroyed so I asked my Mom if we could come here and help."
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| For more photos, see their Facebook album |
Another Proud Lincoln Moment
From historynet:
Robert Todd Lincoln was the eldest of Abraham and Mary Lincoln's four sons. A 17-year-old student at Harvard when the Civil War began, he spent the majority of the war years at college. Much to the embarrassment of the president, his mother refused to allow him to enlist. In February 1865, Robert joined General-in-Chief Ulysses S. Grant's staff as a captain and assistant adjutant general of volunteers. He stayed with Grant until the end of the war, accompanying him to Washington on April 13, 1865.At www.ancestory.com/lincoln:
Handwritten Civil War documents and records: One standout document is a personal letter from Lincoln to General Ulysses S. Grant asking for his son to be stationed in a safe location during the Civil War.More Learn Liberty Vignettes
Not a fan of the contrived Occupy movement, but as for telling the emperor he's wearing no clothes...
Political Cartoon
Or, say, a cable network....
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| Courtesy of Steve Kelley and Townhall |
Bruce Springsteen and the E-Street Band, "Santa Claus is Coming to Town". Yes, I'm aware it's another 6 months before most people will be ready for Christmas music, but I can't do a Springsteen retrospective without featuring how he completely remade a classic Christmas song, making it his own.
