Miran gets outvoted. Harvard’s money and Naval target practice

Miran gets outvoted. Harvard’s money and Naval target practice

Is there any news other than Trump?

Trump’s man at the Fed, Stephen Miran, voted for “only” a 50 basis point drop in the Fed funds rate. Recall the president wanted 300 basis points. The other Trump appointees apparently disagreed and supported the 25 basis point drop. Miran was the only member of the Open Market Committee to dissent. I was mildly surprised given that two members – both reserve bank presidents – had express some hesitancy about decreasing the rate at all given the uptick in prices. However, concerns about the faltering economy as evidenced by the loss in jobs carried the day. Look to see the impact on short term rates and the 10 year Treasury.

There are signs that the job loss is not just due to immigration issues but that middle managers along with lower paid workers are being laid off. The previous narrative was that there was just lower hiring but also low firing. Now the thinking is that in those areas that are affected by the tariffs, companies are not only not hiring but have started to fire employees. Again the Fed’s mandate is full employment and price stability. The 25 basis point cut is actually a sop. It is too small to make a difference in either the fight against inflation or for full employment. Yet once again any size rate cut would not make employers want to hire unless consumer sentiment increased leading to increased business investment and hiring. As long as we continue to have fiscal irresponsibility and high tariffs, there is precious little that the Fed can do to boost GDP.

I wonder if there has been another Fed appointee who has been on the job less time than Miran and participated in an Open Market Committee meeting? Miran may have a PhD and be chair of the Council of Economic Advisors, but I wager he has precious little knowledge of the workings of monetary policy. I guess that he doesn’t need to know anything except vote how Trump wishes him too. It will be interesting to see what other duties and responsibilities as a governor he will be responsible for in his short time at the Fed. I am sure that Miran is smart but his resume is almost devoid of accomplishments, unlike those of Kugler who he replaced or Cook, Jefferson and Waller, the other PhDs on the Board. It just looks like he gets positions because he knows the right people. If I am wrong, please correct me. But that is my impression.

I am somewhat reminded of an appointment to the Board by Jimmy Carter. One story that was widely circulated was that the appointee was quoted as saying that when he came to the Board, he was overwhelmed with all of the theories, statistical analyses and intricacies of monetary policy and its relationship to the economy and to bank regulation. But after a couple of weeks, he now understood it all. A staffer said that if he came to work with a hangover, the quickest way to get sober was to talk to that governor who lasted less than a year.

It’s Harvard’s money – now

A dear friend sent me an article about a federal judge ruling that the Trump administration could not cancel the Federal government’s research funding. Judge Alison Burroughs (an Obama appointee) wrote “The government-initiated onslaught against Harvard was much more about promoting a governmental orthodoxy in violation of the First Amendment than about anything else.” I don’t know if it was a violation of the first amendment. It may surprise some that I agree with the ruling on the cutting off of future Federal funds. That funding came from a previous administration and not from this one. It should remain in place. However, any future funding coming from the Trump administration should in aligned with this administration’s wishes. It’s their (rather our) money. If Harvard or any other university disagrees with how the administration wants that money used, then it should not apply for it. Hillsdale College anyone?

After her ruling on the research cuts, the president tweeted “Trump hating judge. She’s a total disaster.” Burroughs was the judge who rejected the lawsuit brought by Asian students against Harvard’s race based admissions. 

Burroughs is also the judge who ruled against Trump’s attempt to ban foreign students from Harvard. I wonder if there will ever be an instance where she rules in favor of the administration?

Naval target practice

Lastly, I am a bit uneasy with the Navy’s blowing up the two speedboats killing 14 (alleged) drug smugglers. Couldn’t they just arrest them and confiscate their illicit cargo? Maybe blow them up if they couldn’t apprehend them but only as a last resort. I’m a bit surprised that the president hasn’t gotten much push back on this. The president justified the attacks as an act of self-defense. But isn’t that just a wee bit farfetched? Like 007, the president apparently as a license to kill. The vice president seemed absolutely giddy. He said that the U.S. should treat drug traffickers as if they’re combatants in a war. I guess that is the “act of self-defense” argument. Vance said “I think the rules of engagement should be similar to what they are in war, because we are, in fact, in a war against these drug cartels.”

Vance also said “Killing cartel members who poison our fellow citizens is the highest and best use of our military.” I am not going to quibble over words but “highest and best use”? Only Rand Paul (who else) among the republicans had the temerity to disagree. Paul said “Did he ever wonder what might happen if the accused were immediately executed without trial or representation??” Paul asked. “What a despicable and thoughtless sentiment it is to glorify killing someone without a trial.”

I am in favor of interdiction of fentanyl into the US. But there is little evidence that these attacks on the speedboats were for any reason other than Trump sending a message to Nicholas Maduro.