Home ownership = white supremacy? Real cocaine smugglers. HHS

White folk against “white supremacy”

I am not going to spend a significant amount of time on Mamdani and New York City. But true to his word he is going to govern like a socialist. That shows up in his appointments some of whom appear to be on the lunatic fringe of the far far left. Particularly noteworthy is his choice of activist Cea Weaver for the “Office to Protect Tenants” – yes there is such a thing. Weaver, who is white, is on record as saying that home ownership is “a weapon of white supremacy” – whatever that means. She, like Mamdani, wants to seize private property. For her, now being the rent control czar, this means denying rent increases to drive down the value of rental housing to the point where the landlords will be forced to sell to the city. When Weaver was confronted by the fact that her mother, a professor at Vanderbilt, is living in a home in Nashville valued at $1.4 million, Weaver reacted by crying and running away from the reporter. Now we all know that a $1.4 million house in Nashville is no mansion – neither are the ones in Knoxville for that matter. I wonder if Weaver thinks her mother being a homeowner is also a “white supremacist?” Why is Weaver, like Mamdani, and all these socialists children of privilege? This woman is clearly another poster child for the left’s lunatic fringe.

Real cocaine smugglers versus alleged ones

Have you noticed that all the reports of the navy blowing up those speedboats in the eastern Caribbean say that they were “alleged” cocaine boats? Isn’t there any evidence? Well it seems that it is better to be a real one than an alleged one. For decades the Coast Guard has the task of apprehending those running cocaine in the Caribbean. They still do. Between September 1 and November 30, the Coast Guard reported stopping 38 boats carrying drugs. During the same period the navy blew up 22 boats killing 83 people. What happened to the people captured by the Coast Guard? They were set free! The “Justice” Department’s Pam (Blondie) Bondi chose not to prosecute them. WTF? For example, on November 19, a Coast Guard cutter returned to Port Everglades after seizing 49,010 pounds of cocaine in 15 boat interdictions. Guess the navy didn’t have a chance to blow them up. “The cutter took custody of 36 smuggling suspects during the mission, repatriated 29 to Ecuador for prosecution and referred the others to the Justice Department.” I wonder if the “Justice” Department will seek the death penalty? Oh wait, they can’t. Under U.S. law, the death penalty generally is not available in drug cases. The only death penalty that is enacted is if the navy sees them first.

Now the latest from HHS

Robert Kennedy’s HHS has just unveiled a new vaccine recommendation and a new food pyramid. No longer are 17 shots recommended to be taken by our children. The new number is 10. Kennedy said this was emulating peer nations. In this case the “peer” nation is Denmark which has a smaller and more homogeneous population. I am not saying that Denmark’s schedule is inappropriate for the US but let’s not call it a “peer.” Kennedy has long been in the anti-vax camp but as HHS points out “No vaccine is being banned or removed. Every vaccine currently recommended by the CDC remains available, fully covered by insurance, without cost sharing. No family will lose access to vaccines.” 

The vaccines removed are for respiratory syncytial virus (RSV), hepatitis A, hepatitis B, dengue, meningococcal ACWY, and meningococcal B. Those can be included through consultation between parents and their doctors. I would be shocked if the majority of the doctors did not recommend that their patients continue with the old full vaccine schedule. In large part the medical establishment has criticized HHS for removing these vaccines. Also the states, not the federal government, have the authority requiring the vaccinations of school children. It will be interesting to see which, if any, adopt HHS’s recommendations. The doctors’ groups without exception have said that the changes were made without evidence that the current schedule was harming children. It was pointed out that one, rotavirus, could return if vaccination ended, he added. That diarrheal disease once hospitalized thousands of children each winter, something that no longer happens. BTW, the decision was made without input from an advisory committee that typically consults on the vaccine schedule. 

Then there is the food pyramid. The new one actually inverts the old one, deemphasizing grains and low-fat foods and placing more importance on dairy and meat proteins. Gone are ultra-processed foods and added sugars. Some of the multitude of folk who dislike RFK, Jr have pointed out that half of the panel making the recommendations have ties to the dairy and meat industries. But seriously, does anyone pay any attention to the government’s food pyramid? But hey, maybe if you adopted this new food pyramid you too could look like Robert Kennedy, Jr.!

Venezuelan takeover with this bunch? ICE in Minneapolis

Venezuela takeover with this bunch? 

One of the consequences of our takeover of Venezuela is for other countries to claim a Trump-like Doctrine in their own back yards. Obviously what comes to mind is Russia’s invasion of Ukraine or China’s threatening to seize Taiwan. We and NATO have aided the Ukrainians to defend themselves against the Russians. Russia may rattle its sword but the Ukraine folly has proven the Russian army to be a joke. But what if that Russian submarine sent to escort the tanker from Venezuela had interceded to prevent the boarding of the boat by the US military. What then? Will the exerting of supremacy in the western hemisphere make the world safer or will it make it riskier? Time will tell. China keeps acting like its going to attack Taiwan. If so it would pay a high price even if we did not intervene. Presumably we would move to deter the Chinese hoping that the result would not ignite a war. But the Chinese have disputes with India along their shared border and with Viet Nam and the Philippines in the South China Sea. What if they tried their version of the Trump Doctrine there? Would Australia do anything or Japan or US? 

The president said that the U.S. is going to “run” Venezuela “until such time as we can do a safe, proper and judicious transition.” But then why did we leave intact the bad actors behind Maduro rather than replacing the government and forcing out their military leaders? I know that this was the recommendation of the CIA but I am not certain why. Trump said that Machado and Gonzalez who defeated Maduro in two elections were too weak to govern even though the polls show them with high approvals. Elevating Delcy Rodriguez to interim president and keeping Jorge Rodríguez Gómez, Vladimir Padrino López and Diosdado Cabello in power may prove to be a mistake. Rodriquez’ socialism may be worse than Maduro’s. Her brother Gomez is head of the National Assembly and was Maduro’s voice in the legislature. Lopez is defense minister and Cabello is head of the police, military and intelligence forces. Cabello has been called the most ideological and violent member of the regime and the most likely to stage a counter offensive against the US forces. Seems to me that keeping these three in place is just asking for trouble. 

The president has said that we are going to sell 30 – 50 million barrels of Venezuelan and he will determine how the receipts are spent. He tweeted “This Oil will be sold at its Market Price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States!” Somehow it is not a surprise that the president will decide who gets what from the sale. Any for Don Jr and the rest of the family? Just asking.

One interesting development has been the reaction of Mexico’s president Claudia Sheinbaum to the takeover. She has sought good relations with Trump despite his imposition of tariffs and occasional threats to invade Mexico. Yet after the seizure of Maduro she said “The Government of Mexico energetically condemns and rejects the military actions unilaterally executed by the Armed Forces of the United States of America.” Historically, Sheinbaum’s Moreno party has not be a friend of America and Sheinbaum in particular has supported Maduro in Venezuela. Now will Trump seek to remove Sheinbaum and her party? Stay tuned.

The Minneapolis shooting

A few Somalis in Minnesota scammed the country out of $9 billion and the president and the republicans went bonkers. Medicaid fraud is over $100 billion per year and where are the outrage and legions of investigators and investigations to send those fraudsters to jail?  In Minneapolis there have been over 80 arrests and the investigation is on-going. It seemed like the FBI and the Department of Justice were proceeding nicely despite the best efforts of Minnesota officials not to assist in the effort. Evidence is coming out that many state and local officials were complicit in the fraud. But what was the justification for the president ordering 2,000 ICE personnel to descend on Minneapolis? Isn’t this a bit much?

Yes there may be some illegals among the Somali population but most are citizens. Was this just intended to be harassment? Regardless, it was a situation ready to explode and explode it did. Minneapolis prides itself as a sanctuary city. The state and local politicians are mainly left wingers who hate Trump and detest ICE. It was no surprise that when ICE arrived an instant mob of protestors appeared to deter them. One of the protestors was shot and killed. ICE claims that she was weaponizing her car and tried to run over one of them. The others say otherwise. 

Naturally all the democrats say the shooting was akin to murder while all the republicans say it was justified. There have been shouting matches in the halls of congress and democrats calling for the impeachment of Kristi Noem, the head of Homeland Security. House minority leader Hakeem Jeffries called Noem a liar and said “There’s no evidence that has been presented to justify the shooting of an unarmed woman in Minneapolis. The so-called Secretary of Homeland Security Kristi Noem has zero credibility.”

Minneapolis’ mayor has said of ICE “Get the f—- out of Minneapolis” (BTW, “comedian” Jimmy Kimmel said as much on his show – see the Youtube video https://www.newsbreak.com/mediaite-520570/4431258467359-get-the-f-ck-out-jimmy-kimmel-puts-minneapolis-mayor-s-furious-ice-killing-rebuke-on-a-t-shirt).

Minnesota’s governor Walz actually said that he may call out the national guard to “protect” his citizens from ICE. Walz said that the state “was at war” with the federal government (shades of Jefferson Davis!). Now isn’t that an act of rebellion? How would that be handled by Trump? Will he try to arrest Walz and have him tried for treason? BTW, the woman shot was white. Can you imagine what would have happened if she has been a person of color. It would have been George Floyd all over again.

Meanwhile the president said he wanted to deport the fraudsters and strip any citizen of their citizenship. Tennessee’s Marsha Blackburn is accommodating him by introducing legislation to do just that. She says “The fraud schemes we have seen in Minnesota and across the country are a betrayal of hardworking American taxpayers, and individuals like the Somali scammers in Minnesota should be subject to both deportation and denaturalization for these crimes.” But why pick only on the fraud of a few Somalis? Why not make the law read for automatic deportation and denaturalization of anyone convicted of committing a felony? Medicaid anyone?

Alaska, free at last. Bye, bye some tariffs. Hegseth vs Kelly

Alaska, free at last, free at last. Kudos to the Trump administration for freeing Alaska from the warm cuddly clutches of the left who have treated the state as its own personal national park. It was a no development, no extraction, no mining, no drilling, no nothing, just stay poor policy. Alaska’s vast stores of gas and oil will be liberated as well as the state’s minerals so desperately needed by US industry and the military. The hope is that all this will start to happen before the democrats come back into power. It makes no sense that we are dependent upon China for these minerals when we have them within our own borders. Are the democrats getting a cut from the Chinese and the Russians? 

If the administration is smart – and on this issue I think that they are – they will threaten to shut off the gas, oil and mineral spigot from Venezuela going to China. Then make the Chinese cool their aggression worldwide and especially to Taiwan. Yes I know that the weenies out there will say that all of this would threaten China and they would increase their belligerence rather than decrease it. I think that misses the point. The Chinese are used to being a bully with the might of its economic engine. But the Chinese economy is in trouble. Being export driven has screwed its people who are still poor. Chinese per capital income is a little more than $13,000 or 17 percent of the per capita income in the US. China’s mercantile policy is only good for the Chinese government not the Chinese consumer. If Trump thinks exports are great all he needs to do is look at China with its $1 trillion trade surplus and multitude of poor. As to the Russians, all Trump needs to do is to tell Putin that if he doesn’t stop his Ukraine folly and quit rattling his sword toward NATO that we will flood world markets with oil which would drive down its price and bankrupt Russia. Then the carrot: free trade agreements with both.

Furniture and pasta tariff retreats

Trump’s tariffs continue to change almost daily. After imposing a ridiculous 50% tariff on imported cabinets and vanities, 25% on upholstered furniture and 30% on wooden furniture, the president has delayed these for a year. Instead of protecting the US furniture industry – mainly in North Carolina and Mississippi – the results were threatening of the financial viability of the American companies while US furniture prices are increasing by almost 5 percent. The American firms buy many of their components from foreign sources that we don’t produce here. The tariffs caused their costs to increase. One North Carolina company CEO said that his tariff costs increased from $900,000 to over $3 million and for a full year may be $7 million. One company has actually said that it may be forced to move to Southeast Asia. I have previously pointed out that the tariffs would not cause manufacturing to move back into the states simply because skilled labor is not here anymore. These tariffs like so many more just were not well thought out and the unintended consequences are causing the administration to retreat.

The president also rolled back the announced increase in tariffs on Italian pasta. Buono! Here the tariffs were an unbelievable 92 percent (and I thought he liked Meloni) meaning that Italian pasta would disappear from American shelves. The administration said that Italian pasta was being dumped on the American market at artificially low prices that undercut U.S. manufacturers. The tariffs will now be 2.26 percent. Now we need someone in the administration to explain the logic of pricing at “artificially low” rates and how the Italian companies could profit from such an action. BTW, don’t “artificially low prices” benefit the American consumer?

Hegseth versus Mark Kelly

Defense Secretary Hegseth has decided to go after Arizona senator Mark Kelley. Kelly and a few others in Congress foolishly did a video urging members of the military to disobey orders they considered unlawful. Hegseth tweeted that “in response to Senator Mark Kelly’s seditious statements — and his pattern of reckless misconduct — the Department of War is taking administrative action against Captain Mark E. Kelly, USN (Ret).” Kelly was sent a letter of censure and the administrative action which involves a reduction in rank and in his military pension. Kelly told Hegseth to pound sand saying “If Pete Hegseth, the most unqualified Secretary of Defense in our country’s history, thinks he can intimidate me with a censure or threats to demote me or prosecute me, he still doesn’t get it.” “Over twenty-five years in the U.S. Navy, thirty-nine combat missions, and four missions to space, I risked my life for this country and to defend our Constitution – including the First Amendment rights of every American to speak out. I never expected that the President of the United States and the Secretary of Defense would attack me for doing exactly that.”

Again, I don’t know what would constitute an “unlawful act” and how an enlisted military person would know it. Also what are the consequences of disobeying a direct order? Kelly should know all of this and the impossible position that he is putting his fellow warriors in. I think Hegseth is right on this one and Kelly is wrong. As to his military pension he is obviously double dipping given his senate pay.

National guard deployments, Warm bosom of collectivism and Bourbon’s decline

No more national guard deployments?

Likely as a result of the recent Supreme Court ruling the president has announced that he is pulling the national guard out of Chicago, Los Angeles and Portland. Curiously he tweeted “We are removing the National Guard from Chicago, Los Angeles, and Portland, despite the fact that CRIME has been greatly reduced by having these great Patriots in those cities, and ONLY by that fact. We will come back, perhaps in a much different and stronger form, when crime begins to soar again – Only a question of time!” The reason this is curious is because the guard was sent into these cities to protect ICE and its facilities, not to deter crime. Crime deterrent was the reason the guard was sent into Washington DC, Memphis and New Orleans. That the president would omit the protection of ICE and only mention crime instead is a bit puzzling.

Socialism is for the warm and cuddly

When Zohran Mamdani was sworn in as mayor of New York, his inauguration speech contained all the promises he made on the campaign trail – universal childcare, free buses, government run grocery stores a tax on the wealthy and all the rest. Even getting rid of the gifted and talented program in the public schools. He promised to turn New York City into an affordable socialist paradise. He said “We will govern without shame and insecurity, making no apology for what we believe. I was elected as a democratic socialist and I will govern as a democratic socialist. I will not abandon my principles for fear of being deemed radical.”

But the phrase that generated the most buzz was “We will replace the frigidity of individualism with the warmth of collectivism.” Hey, give me that frigid individualism any day to the warm cuddly arms of collectivism. Where is collectivism warm? Where is it compassionate? Where does it lift the impoverish to prosperity? Even where it promises cradle to grave security, where does it provide it? And at what cost? Mamdani sounds like a latter day version of Maduro, reading from the same socialist playbook. Promise them equity. Promise to tax away the billionaires. Promise justice (where was defund the police?). Promise abundance in the face of scarcity. Promise everything and when he fails to deliver, blame it on the rich (and of course Trump) for setting impediments in his path as his city deteriorates around him. Mamdani needs Governor Hochul and the state legislature to acquiesce to his demands or else he will blame them to being in the pockets of the dastardly capitalists who resist him.

What will happen? One observer says that if Mamdani is really serious then Miami will replace New York City as the financial capital of the world. He (David Sacks) also predicts that Austin will replace San Francisco as the tech capital. And speaking of San Francisco, Mamdani also is going to quit trying to getting rid of the homeless encampments. This earned the praise of the homeless advocates. – yes there is such a thing. Hum. I wonder if the homeless advocates are themselves homeless?

Fall of the House of Bourbon

Speaking of warmth, what is happening in the market for bourbon? Jim Beam, the largest bourbon distiller, is shutting down production as inventories pile up, demand and exports fall (see Canada). Demand accelerated during the pandemic (isn’t that interesting?) and production in the industry ramped up. Now demand has fallen, there is the impact of Trump’s tariffs (again see Canada) and inventories have shot up. There are an estimated 16.1 million barrels of bourbon sitting in Kentucky warehouses. Distillers actually pay a barrel tax on those barrels which was $75 million in 2025. Beam will likely survive but many of the smaller distillers won’t. Sadly, one of them may be Uncle Nearest which is under court ordered receivership after a $108 million loan default. Uncle Nearest is named after the slave who taught a young Jack Daniel how to distill. Supposedly, his original formula is the basis for the premium liquor bearing his name. BTW, I don’t drink liquor but if I did, it would be Uncle Nearest.

One of my few regrets in life is that I don’t have the formula of the moonshine crafted by my great grandfather (Pop) Milous Towles. I could have had one of the Tennessee moonshine distillers (I have a former student who is the president of one) bottle and distribute it. It would be a fitting tribute to a truly remarkable man.

What do you mean that I have to pay the import fee?

I placed an order on ebay. Apparently it is being shipped from overseas because I got this message: “Due to US Customs policies, you will need to pay import fees for this order to the shipping carrier prior to delivery.” What? Didn’t President Trump say that the country of manufacture had to pay the import fees and not us? Weren’t countries going to pay to have to export goods to us? Say it ain’t so. This notice reminded me that everyday my old friend Professor Don Boudreaux posts on the tariffs. Those most interested in that matter should go to his website https://cafehayek.com as I do daily. Don is a regular contributor to the Wall Street Journal, often with my old economics tutor, Phil Gramm and to AEI today – see his “The Case for Economic Freedom” https://www.aei.org/multimedia/the-case-for-economic-freedom/. Here is his post – a letter to the “Tariff Man” on January 5^th.

Mr. Donald J. Trump
President, Executive Branch
United States Government
1600 Pennsylvania Ave., NW
Washington, DC 20500

Mr. Trump:

On New Year’s Eve your office released a “Fact Sheet” stating that you “imposed reciprocal tariffs to take back America’s economic sovereignty, address nonreciprocal trade relationships that threaten our economic and national security, and to remedy the consequences of nonreciprocal trade.”

Two things.

First, by its nature, all trade is reciprocal. Each party gives something to the other party and receives in exchange something that each party values more highly. Therefore, your punitive taxes – a.k.a. tariffs – on Americans’ purchases of imports are aimed at correcting a problem that doesn’t exist.

Your only possible retort that would retain as much as a tenuous connection to logic would be to insist that foreigners regularly dupe us Americans into buying things that we don’t want to buy – that is, to insist that we Americans are incurably stupid at conducting our own economic affairs, while foreigners are so astonishingly clever that they routinely swindle us out of our own money. Do you, sir, really believe that your fellow Americans are generally the intellectual inferiors of foreigners?

Second, by obstructing each of your fellow Americans’ voluntary, peaceful trades with foreigners you diminish the economic sovereignty of each and every one of us. What (il)logic leads you to conclude that by obstructing – with your taxes on our purchases of imports – the economic sovereignty of 340 million Americans, you thereby “take back America’s economic sovereignty”?

Your tariffs do for us Americans the opposite of what you assert: they diminish our economic sovereignty and, in this sorry bargain, also make us poorer than we’d otherwise be.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

Feliz Año Nuevo!

The new Trump Doctrine was in full display as American forces attacked Venezuela and sacked Nicolas Maduro. Speaking of sacks, it was a sad day as both my Ohio State Buckeyes and Georgia Bulldogs were cursed with a first round bye in the college football playoffs and lost. But the capture of Maduro and his wife was even more astounding than the losses by the Buckeyes and Bulldogs. There no loss of life or loss of equipment in the raid. The Venezuelan armed forces must have been taking a siesta and Maduro’s personal (Cuban) bodyguards must have been bought off. How else could this have happened? Trump has asserted American supremacy in this hemisphere and has flexed American might through its superior armed forces. I don’t recall if diplomacy was tried by this administration with regards to Maduro. All I remember are threats, a build up of military forces, the bombing of drug runners, the naval blockade and the shutting down of Venezuelan airspace. That, my friends, is a different type of “negotiations.” 

This operation was in direct contrast to George H.W. Bush’s seizure of Manuel Noreiga. Bush ordered the U.S. military to invade Panama in late 1989, sending 20,000 troops to topple Noriega. The operation left 23 American soldiers dead and hundreds more injured. Noreiga was convicted on charges of drug trafficking, money laundering and racketeering and was imprisoned for 17 years. Does the same fate face Maduro and his wife?

Trump told Maduro to leave. Instead Maduro put on his best “don’t worry, be happy” face. He was shown dancing at a rally in Caracas. There he vowed to stand (or dance) against American aggression. Maduro told the cheering crowd “Be certain that I will never fail you — never, ever, never.” Oops. Now he and his wife face indictments brought by Trump’s attorney general Pam Bondi. “Nicholas Maduro and his wife, Cilia Flores, have been indicted in the Southern District of New York. Nicolas Maduro has been charged with Narco-Terrorism Conspiracy, Cocaine Importation Conspiracy, Possession of Machineguns and Destructive Devices, and Conspiracy to Possess Machineguns and Destructive Devices against the United States.” “They will soon face the full wrath of American justice on American soil in American courts.”

Here is what Secretary of State Rubio tweeted “The 47th President of the United States is not a game player. When he tells you that he’s going to do something, when he tells you he’s going to address a problem, he means it… This is something that was a direct threat to the national interest.” Now I am not entirely certain how Venezuela threatened our national security but as  Rubio said “This is a president of action.” Do tell.

While at first some observers said that a transition government would be put in place headed by Nobel laureate Maria Corina Machado and Edmundo Gonzalez Urrutia, the president had other ideas. Corina Machado is the opposition leader who was banned by a Maduro-run court from running for president. Gonzalez ran in her place and by some counts beat Maduro 2-1 in the 2024 election. Maduro refused to concede and with the backing of the military stayed in power. Since polls indicate that Machado and Gonzalez have an approval rating of around 70 percent, some had suggested that a transition government headed by then makes sense.

Not so fast said Trump who said that the United States would “run the country until such time as we can do a safe, proper, and judicious transition.” So is now Venezuela an unincorporated US territory much like American Samoa? The president also said that Venezuela’s oil is now ours which may have been the motivation all along. US oil companies will join Chevron in the country and drill, baby, drill. The country used to pump 3 million barrels a day but now only pumps 900,000. That will change. Oh and by the way, the president said that we will share some of the oil revenue with the Venezuelans being the magnanimous person that he is.

TRUMP: US Oil Companies Will Fix Venezuelan Infrastructure To ‘Start Making Money for the Country’ “As everyone knows, the oil business in Venezuela has been a bust, a total bust, for a long period of time. They were pumping almost nothing by comparison to what they could have been pumping and what could have taken place. We’re going to have our very large United States oil companies, the biggest anywhere in the world, go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country.”

Congressional republicans praised the president while the usual suspects are whining and condemning the snatching and take over of the country. Here is what Connecticut’s Chris Murphy said “President Trump thinks he is above the law. He steals from taxpayers. He thumbs his nose at the law. And now, he is starting an illegal war with Venezuela that Americans didn’t ask for and has nothing to do with our security.” Both House minority leader Hakeem Jeffries and Senate minority leader Chuck Schumer said that Maduro was “an illegitimate dictator” but that “launching military action without congressional authorization and without a credible plan for what comes next is reckless.” “The idea that Trump plans to now run Venezuela should strike fear in the hearts of all Americans.” Rep. Adam Smith, the top Democrat on the House Armed Services Committee, said that “there’s no evidence whatsoever this makes America safer. This doesn’t seem to have much to do with drugs. It seems what this is about is Trump wants Venezuela’s oil.”

Of course, Trump could not have gone to congress first. Doing so would have alerted Maduro before the congressional briefing was over. And although some democrats are comparing this to the military incursions in Iraq and Afghanistan, that appears to be just a wee bit over wrought in that there is no on-going armed conflict in Venezuela to counter the American presence there. No will the cartels try to organize guerrilla forces to resist the American takeover. Only time will tell but in the meanwhile

Watch out Diaz-Canel!

A new Fed mechanism?

What is the tri-party general collateral rate and why is it becoming the focal point of the conduct of monetary policy? Here is what the Fed of New York says “The tri-party general collateral rate (TGCR) is a measure of rates on overnight, specific-counterparty tri-party general collateral repurchase agreement(repo) transactions secured by Treasury securities. General collateral repo transactions are those for which the specific securities provided as collateralare not identified until after other terms of the trade are agreed. The TGCR is reported by the New York Fed. It is calculated as a volume-weighted median of transaction-level tri-party repo data collected from the Bank of New York Mellon only. This rate excludes general collateral finance repo transactions and transactions to which the Federal Reserve is a counterparty.”

Whew! Got that? The Dallas Fed president Lorie Logan proposed changing the Fed’s use of the fed funds rate to the tri-party general collateral rate in a recent speech. Logan notes that the fed funds rate is becoming less and less effective in implementing monetary policy because of its diminishing importance in monetary markets.  In a speech entitled “Ample liquidity for a safe and efficient banking system” Logan states that while she did not support the Fed’s recent lowering of the Fed funds rate she did support the Fed’s recent decision to stop the run off of the Fed’s asset holdings, endorsing the current portfolio size. That portfolio was increased significantly to provide liquidity during the pandemic. I have noted before of the dramatic increase in the portfolio even before the pandemic and the rise during the pandemic. The Fed then started reducing the portfolio by a rather small $20 billion a month until December 1. During the pandemic the portfolio increased by $4.25 trillion to almost $9 trillion by June 2022. As of December 1, 2025 the portfolio was down to $6.5 trillion.

Just to review, when the Fed purchases securities from the banks, it increases the banks’ excess reserves. The hope is that the banks will lend out these excess reserves providing liquidity to the economy which will lead to increased consumer spending and increased business investment. But since 2008, the Fed also pays interest on bank reserves. The key here is then the relationship between the interest paid on reserves and what the banks can earn by lending out the funds. But it is also important to note that with the run up in the Fed’s balance sheet there was an overabundance of reserves in the banking system. If this excess is greater than loan demand and investment demand then the banks have no incentive other than to hold those reserves to earn the interest paid to them by the Fed. 

The Fed funds rate is the rate charged to borrow in the overnight market. Banks that are short of reserves borrow from those with excess reserves. However, since the system is now awash in reserves from the run up in the Fed’s portfolio, there is less demand in the Fed funds market. Where once trillions were traded overnight, it is now only about $100 billion meaning that manipulating the Fed funds rate has less of an impact on bank lending than in the past. Logan notes that the trillions are now traded in the repo market where borrowers get short-term financing by pledging securities like Treasury bills as collateral. Currently the Treasury repo market is around $1 trillion a day. So Logan wants to move to a Treasury repo rate target and away from a Fed funds rate target. Large segments of the financial marketplace trade in Treasury repos while currently mainly the Home Loan Banks are lending in the market since their reserves do not earn interest.

Currently the Fed already is influencing repo markets through its Standing Repo Facility designed to keep the Treasury repo rate in sync with the Fed funds rate. Logan argues that targeting the Treasury repo rate would more directly achieve the Fed’s goals mainly due to the scope of the repo market compared to the narrowness of the Fed funds market. 

I am not going to get into the technical aspects of how the repo market works. But you can go to Logan’s speech to view the details.

https://www.dallasfed.org/news/speeches/logan/2025/lkl251031

The relevant question is whether the tri-party general collateral rate is a more robust transmission mechanism than the Fed funds rate. One paper from the Dallas reserve bank estimates that it is.

“A simple measure of monetary policy transmission,” by Sam Schulhofer-Wohl

https://www.dallasfed.org/research/economics/2025/1216-sws-transmit

All within the Fed are not in agreement with Logan however. Most notably is Kansas City bank president Jeffrey Schmid who is critical of the Fed’s holding of such a large balance sheet saying that it “increases the Fed’s footprint in financial markets, distorts the price of duration and the slope of the yield curve, and potentially blurs the line between monetary and fiscal policy.” Treasury secretary Bessent agrees with Schmid. Schmid wishes for a less complicated way of conducting monetary policy while Logan appears to make it even more complicated. My bet is that the Fed will move in the more complicated direction seeking to further obscure its conduct of monetary policy. However, it likely will never get back to the Greenspan era where the Fed obsecrated as much as possible trying to keep the markets from lessening the impact of changes in monetary policy.  

Trump is bringing the world closer together

China is now thanking Trump for all the tariffs imposed on every country and island in the world (except Russia). China’s trade surplus has topped $1 trillion for the first time in history and total world trade has increased since Trump’s “Liberation Day” tariffs. China has found new trading partners or has increased its trade with old partners. Trumps tariffs are between the US and everybody else and not between China and everybody else. So while back in the 1930s the Smoot-Hawley Act led to a sharp fall in world trade by 65% between 1930 and 1933. Now the opposite has happened. With Smoot-Hawley the other countries imposed their own retaliatory tariffs. In the case of Trump’s tariffs that did not occur. Only China and Canada had the temerity to counter the US tariffs with restrictions of their own. Countries started lowering barriers between themselves to make up the loss of trade with the US. 

Trump has brought world closer together. Relatively little of US GDP (14.3 percent) depends on trade whereas our 10 largest trading partners are much more dependent upon trade with imports and exports constituting over 50 percent of their GDP. Since the imposition of the Trump tariffs, China’s exports to the US have fallen by an astounding 65 percent. However, Chinese exports to Southeast Asia was up by 61%, to Japan and Korea by 41%, to Africa by 35%, to the European Union by 28%, and to India and Latin America by more than 10%. All totaled, Chinese exports will grow by 8 percent while US exports will fall by 3.4 percent. China and India have even cooled their long standing border dispute and are becoming closer due to the increased trade. Trump’s threatening to increase India’s tariffs to 50 percent if they didn’t stop buying Russian oil led to an increase of 33 percent in trade with China.

We are bringing the world closer together while we are isolating ourselves economically. Trump apparently thinks that this is a good thing as he keeps insisting that his tariffs will somehow make us better off, evidence to the contrary. Almost 50 percent of all US imports are intermediate (not final) goods and the tariffs increase input costs. Instead of expanding domestic production as the president asserts, the opposite happens and production costs increase leading to increases in output prices and a reduction in consumer demand. On the export side, US goods get relatively more expensive than their foreign competition meaning lower US exports and causing the US to be less competitive in world markets. Will this mean that Boeing will sell fewer airplanes? Will the US defense industry lose sales to foreign competitors with the higher prices? Most likely. And if the US companies decide to keep prices competitive by absorbing the increase in input costs, they will lose profitability and have to retrench and lay off employees. Manufacturing employment has fallen for nine consecutive quarters.

Since it seems that Trump’s tariffs are constantly changing I don’t know what they are now for each country. For China they were once 150 percent and settled down to 47.5% and now there are being made changes on selected products. The same has occurred with Canada whose economy is perilously close to going into recession causing it to sign new trade agreements with China and the EU. It was once feared that Mexico’s economy would go into recession but the opposite has happened. Mexico’s exports to the US have actually increased. Although automobile related exports fell, other exports rose. Mexico still faces the high tariffs: 25% on non-U.S. content in autos, 50% on aluminum and steel and 25% on non‑USMCA‑compliant exports. But 85% of Mexico’s exports are USMCA compliant. Mexico’s manufacturing has increased as countries with much higher tariffs have moved some production to Mexico for export to the US. In all Mexico is estimated to have captured 25% of the US trade deficit with China.  Caramba!

Happy New Year 2026

This was year of Donald Trump. Although on the campaign trail Trump denied being guided by the Heritage Foundation’s Project 2025, his policies dovetailed nicely with it. By some accounts, he has implemented about half of the recommendations in Project 2025. Several of the contributors to Project 2025 are now in the administration. Russell Vought is OMB director, Peter Navarro is an advisor, Brendan Carr is head of the FCC, Paul Atkins heads the SEC, Tom Homan is the border czar, John Ratcliffe is CIA director, Monica Crowley is in the State Department along with Michael Anton. Again, it may just be coincidental that his own policies just happened to be many of those found in the document. But that seems highly unlikely, Regardless, the president was a very busy man during this past year and this was perhaps the most consequential first year of any president.

He mandated policy changes in the environment, immigration, foreign trade, foreign affairs, federal workplace, DEI, abortion (what the left calls “reproductive rights”), Title IX and transgender policies among others. During his first term he issued 220 executive orders. He surpassed that in the first year of his second term with 221. He probably won’t break FDR’s record of 1,112 executive orders issued during his four terms in office. But he may come close.

He has continued Biden’s weaponization of the “Justice” Department. In an ideal world the Department of Justice, its investigations and prosecutions are supposed to be free from politics and not pressured by the political and personal preferences of the president. I don’t know if this has ever been the case. Under Richard Nixon the Justice Department dropped its antitrust case against International Telephone and Telegraph (ITT) in exchange for financial support at the Republican National Convention. Justice Department officials were also implicated in the Watergate scandal. President Obama’s department was openly political as his attorney general Eric Holder said that he was the president’s “wing man.” 

President Trump got off the ground running. First he fired Justice official Sally Yates for not defending an executive order. During the year over a third of the senior officials have left the department especially in the civil rights division and those of environmental and immigration. Some say this is a clearing out of those attorneys who are not completely on board with the president’s policies. Recall all the chatter about his policies being resisted in his first term by the “Deep State”? Well, the president was determined not to let this happen in his second term and this has led to a mass exodus of federal officials across the entire government. He also fired every attorney involved in the indictments stemming from the January 6 riot (or insurrection as the left calls it).

The president has also – like Biden – sic-ed the Department on his political enemies seeking indictments against James Comey, Letitia James and Adam Schiff. The indictments against Comey and James have been dismissed. An interesting development was the dismissal of the investigation against Eric Adams, the mayor of New York City which prompted the resignation of several  of the Justice department’s prosecutors. I don’t know what prompted this action but Trump’s critics said it was politically motivated.

One of the interesting things – and again I don’t know if this is unique to Trump – is his appointing his personal attorneys to positions within the department. Pam Bondi, the attorney general, represented him in his impeachment trial. When he fired the attorney general for Eastern Virginia for not pursuing the indictment of Letitia James, he appointed Lindsey Halligan who had no prosecutorial experience but was one of his personal attorneys. He appointed Alina Habba who represented him in some civil cases as acting attorney general for New Jersey.

Then there was the dismantling of USAID and the cutting off of foreign aid and humanitarian assistance severely impacting several thousands of people, especially in Africa. Who can forget the chaos stemming from Elon Musk and DOGE? Then there was the attempt to abolish the Department of Education or more precisely dismantling it by sending many of its functions to other agencies. The same was true for the Consumer Financial Protection Bureau which gets its funding from the Federal Reserve rather than through appropriations. He has pardoned almost 2,000 people many involved in the January 6 riot. Then there are the name changes, the Gulf of America, the Department of War, the change back of the names of the military bases, the Trump-Kennedy Center. The paving of the Rose Garden. The tearing down of the east wing of the White House to build a new ballroom. The deployment of the national guard to protect ICE and ICE facilities. The deployment of the guard to address crime in democrat run cities. The total shakeup at HHS. The confusion over vaccines. The shutting down of immigration both illegal and legal. The abrupt ending of science grants and the exodus of many scientists to other countries. The firing of the number crunchers at Commerce and the dissolution of voluntary committees at NIH and the Bureau of Labor Statistics. He also seems intent on cratering the National Oceanic and Atmospheric Administration, terminating hundreds of employees and cutting contracts and research. Was this due to Project 2025’s recommendation asserting that NOAA was being used to further claims regarding climate change? Office of Management and Budget Director Russ Vought called the National Center for Atmospheric Research (NCAR) “one of the largest sources of climate alarmism in the country.” 

The bombing of Iran’s nuclear facilities intended to dissuade their making of a nuclear bomb. But perhaps the most important items of the year were his successful shutting down of the southern border, his universal “reciprocal” tariffs and his attempts to make peace in some of the world and threaten war in others. He was successful in Israel-Hamas but failed in Russia-Ukraine. He threatened Mexico, Panama, Columbia, Greenland and most seriously Venezuela with military action. Under the pretense of shutting down the Venezuelan drug trade his has openly lusted after its oil. Perhaps he can accomplish both.

He has been less successful on the economic front. Inflation has stayed around 3 percent while he says that affordability is a hoax when it is not. He as cajoled the Fed to do his bidding calling its chairman every name imaginable. He has tried to fire a Fed governor accusing her of mortgage fraud even though documents reveal that he did the same thing on two properties in Florida. His tariff policies have resulted in his retrenching and renegotiating with certain countries and on certain products. He has had to bailout the soybean farmers with $12 billion to offset their loses from the Chinese retaliating against his tariffs just like in his first term.

There is all this and more. At every turn, Trump is sued – to date there have been 530 lawsuit brought against him in 2025. His cases fill the dockets of the courts with the Supreme Court finally beginning to opine on cases involving tariffs and birthright citizenship. But I think the most significant aspect of the Trump presidency has been his relentless effort to expand the scope of presidential power. Presidents have always exercised such power via executive orders but Trump has taken it to another level with his attempts to fire officials that have presidential appointments and are confirmed by the senate for a specified term. He has had mixed success in doing so. This is a reexamination of how independent are the independent agencies that are normally in the executive branch but not under the control of the president.

There is the president’s own industrial policy. Joe Biden’s was centered on green energy, which was the epitome of crony capitalism. Green energy was financed by government loans and tax credits. Its use was mandated by government and would have failed if left to the market. Green energy is not financially competitive without government support and green energy companies fed at the public trough, enriching themselves on the taxpayer’s dime. It also made Al Gore and his buddies rich. Trump is putting a stop to all that ending subsidies and the tax credits, shutting down windmill construction and opening up lands closed to oil and gas development by Biden. 

But Trump has his own industrial policy one that would make Bernie Sanders proud characterized by anointing winners and losers. The government taking equity positions in private firms, imposing profit taking deals from companies like Nvidia and demanding voting rights in firms like US Steel. This has evoked cries of socialism, crony capitalism, state capitalism or as I call it American Socialism. While presidential interference in the economy is nothing new – remember Richard Nexon’s wage and price controls or Jimmy Carter’s lending to Chrysler in exchange for stock warrants – Trump as is his wont has taken it to new heights.

Whew! Yes, there is all this and even more leading to the question of “what does 2026 hold”? Will it be as impactful and as chaotic as 2025? We will soon find out.

Happy New Year

Blowing in the wind

Adding to the growing lists of items that the president says endanger our national security, the president has added wind farms to stop their offshore construction. This has halted projects off the east coast and the democrats are whining. Interior secretary Doug Burgum tweeted “Due to national security concerns identified by the Department of War, Interior is PAUSING leases for 5 expensive, unreliable, heavily subsidized offshore wind farms!” “ONE natural gas pipeline supplies as much energy as these 5 projects COMBINED. POTUS is bringing common sense back to energy policy & putting security FIRST!” 

What are these risks? Burgum lists “the rapid evolution of the relevant adversary technologies, and the vulnerabilities created by large-scale offshore wind projects with proximity near our east coast population centers.” Interior said that unclassified reports “have long found that the movement of massive turbine blades and the highly reflective towers create radar interference called ‘clutter,’” which “obscures legitimate moving targets and generates false targets in the vicinity of the wind projects.” Also a Biden Energy Department report in 2024 noted that reducing false alarms from wind interference could cause threats to the homeland to fly, literally, under the radar. Sounds like a national security threat to me.

The president himself tweeted back in August “STUPID AND UGLY WINDMILLS ARE KILLING NEW JERSEY. Energy prices up 28% this year, and not enough electricity to take care of state. STOP THE WINDMILLS!”

Like the president I have expressed my displeasure and dismay at the wind farms saying that the left forgot about all of their claims about damage to the climate and to fish and birds when it came to the wind farms. They also forget about the problems of disposal of the wind turbines as well. They are also costly and inefficient. What’s not to love?

Of course the left is whining. Massachusetts Gov. Maura Healey pledged to “stand up against this unlawful action by the Trump Administration.” “It’s an attack on our jobs,” Rhode Island Gov. Dan McKee said. “It’s an attack on our energy. It’s an attack on our families and their ability to pay the bills.” They argue that the projects are well underway (Virginia’s is 80 percent completed) and stopping the projects at this point puts people out of work and stops projects that would serve over 3 million homes. This sounds awfully similar to what people were saying when pipelines were shut down and vast amounts of land was ruled off limits to gas and oil projects. I guess now they know how us common folk felt when our utility bills are threatened to skyrocket by the shutting down of pipelines, stopping fracking, shuttering up coal mines and making off limits vast amounts of areas with gas and oil reserves. I guess the left likes brown outs, shortages and higher prices. And these folk are supposed to love the poor?

What’s in a name?

Trump got the Kennedy Center to put his name on the building. He said it was a surprise. Sure it was. He fired the old board and named himself chairman. Then the board approved unanimously the name change, Surprised? Hardly. Karoline Leavitt announced “I have just been informed that the highly respected Board of the Kennedy Center, some of the most successful people from all parts of the world, have just voted unanimously to rename the Kennedy Center to the Trump-Kennedy Center, because of the unbelievable work President Trump has done over the last year in saving the building.”  There will likely be a lawsuit (there is always a lawsuit) claiming that it takes an act of congress to change the name since federal statute (Title 20 of the U.S. Code, section 76i) designates the building “the John F. Kennedy Center for the Performing Arts.” 

We now have a Trump class warship. The president announced that the first ship in the Trump-class of battleships will be the USS Defiant. Construction would take 2½ years. The president has consistently called for a new naval fleet. There are new frigates coming on line. The navy has said “Recent operations from the Red Sea to the Caribbean make the requirement undeniable—our small surface combatant inventory is a third of what we need.” The president has consistently expressed the need to counter the Chinese fleet. Since a new aircraft carrier is also in the planning I bet that the reason he didn’t have his name put on the new battleship is that he wants to carrier to be the USS Donald J. Trump. While we will have the Trump-class ships, the carriers are the Gerald R. Ford class-carriers and are named after presidents Reagan, George H.W. Bush, Ford, Clinton and George W. Bush. No USS Joseph R. Biden or USS Barack H. Obama yet.