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Knoxville Focus

May 30, 2022

Inflation is a rise in the general level of prices. This means that much of the conversation about the cause of the current inflation is confusing at best and essentially wrong. The administration has blamed Putin’s Ukrainian venture, Covid and supply chain bottlenecks as inflations’ primary cause. After first saying that the inflation was transitory, it didn’t take long for the administration to pivot and start pointing fingers at others. Yet Biden has ignored the real culprit – the Federal Reserve.

Yes, there was inflation prior to Biden taking office but that inflation was indeed “transitory”. Trump oversaw a massive increase in spending that was Covid-related but that impact on prices was winding down when Biden took office. Nevertheless, Biden and the democrats pushed thorough a totally unnecessary $1.9 trillion Covid “relief” bill that was a handout to their supporters and contained only about 9% slated to Covid “relief’. From day one, Biden stoked the inflationary fires by declaring war on the fossil fuel industry. His well-documented actions of canceling leases on federal lands, blocking pipelines, discouraging financing of investments in fossil fuels drove up the price of energy. This created a shortage of supply and drove up energy prices. Government policies to “fight” Covid led to supply chain problems as ships await unloading primarily at California docks. This too has led to an increase in prices. Thus, when one looks at the causes of the inflation, it is easy to blame supply shortages.

However, the great Milton Friedman said that in every instance inflation is a monetary phenomenon. That is, inflation cannot occur in the absence of an increase in the money supply. Think of inflation as being the measure of the total air in a balloon and the money supply being the air. If prices increased without adding more air, then it is like one squeezing on the balloon. Prices would go up in on sector but must go down in others. But the total air in the balloon is the same only its being redistributed. Hence, no change in the general level of prices and no change in inflation. Thus, a decrease in supply of some goods would lead to higher prices for those goods but consumers would then demand less of other goods.

The only way to get more inflation is through an increase in the money supply. That is, pump more air into the balloon. The blame for inflation lies squarely on the Federal Reserve. Over the past two years, the Fed has increased the money supply by 40 percent. M2 has increased from $15.5 trillion in 2020 to over $22 trillion today. In doing so the Fed has added to its balance sheet by purchasing over $5 trillion in mortgage backed and Treasury securities. The Fed is staffed by a bunch of smart people who know the consequences of their actions. They know fully well that this dramatic runup in the money supply causes inflation and they know that it is not “transitory”. So why do it? First, the initial runup was deemed necessary to keep the economy from falling into a deep recession due to Covid. However, post-Covid the Fed has continued its easy money policy. In large part it is because its chairman Jerome Powell wanted to get Biden to nominate him for a second term. Since Powell was nominated by Trump and that Biden was hell-bent on erasing all signs of Trump from the first day he came into office, Powell was not going to counter Biden’s policies. Instead, he provided the fuel to finance all the unnecessary spending undertaken by the administration. The Fed knew that its actions was inflationary but went ahead anyway. The Fed’s governors and most of its reserve bank presidents usually concentrate on interest rates and not on monetary aggregates like the money supply. Friedman and monetary economists warn that such a concentration invariably leads to inflation as the money supply grows unchecked. And it did.

Since Fed actions impact the economy with a lag of 12-36 months, look for a longer term inflation. Also hopes for a soft landing are just that – hopes. More than likely, interest rate fixation rather than concentrating on money growth will lead to a recession. Let’s hope that the Fed doesn’t try to overcorrect because the last time it did so, it caused a longer economic slump. Leaving the market to self-correct without Fed interference should cause a shorter term recession, but I am not holding my breath.

It is no secret that we are poorly governed at the federal level. I believe that state and local governments are more responsive to their constituents. One of the obvious examples of poor governance can be found amongst those appointed by the president – and confirmed by the Senate – to run the federal departments and agencies. Some appointments have been weird, with there being little if any competence displayed by the appointee. Consider members of Biden’s cabinet: Deb Haaland the Secretary of the Interior, likely nominated so a Native American could be in the cabinet, or Xavier Becerra, the Secretary of Health and Human Services, nominated because he is Hispanic, or Pete Buttigieg at Transportation, nominated because he is gay, or Jennifer Grandholm at Energy, nominated I guess because she is a straight woman (or birthing person), or Denis McDonough at Veterans Affairs who is not even a veteran, or Marcia Fudge at Housing and Urban Development who probably has lived in a house and is from an urban area. 

Two of the more controversial nominations were for banking agencies and both failed to get Senate confirmation. Sarah Bloom Raskin, nominated to the Federal Reserve as vice chair for supervision and Saule Omarova as Comptroller of the Currency (my old agency). Raskin was nominated because of her views on climate change. She had stated many times the view that the Fed should not allow credit to be given to companies that produce fossil fuels. Not surprisingly, this expansive view of the Fed’s role was not embraced by the Republicans or Joe Manchin who is from the coal producing state of West Virginia. The nomination of Omarova as Comptroller of the Currency was also rejected by the Senate. She had advocated the shrinking of large banks and the shifting of consumer deposits from banks to the Fed. The Comptroller of the Currency is the regulator of national banks – those banks that get their charter from the Federal government rather than the states. Omarova had also been critical of certain bank mergers and had advocated a federal takeover of the banking system. She was strongly opposed by both the large banks and the community banks.

 

Biden also nominated Fed chair Jerome Powell to another term as chairman and Prof. Lisa Cook of Michigan State University and Prof. Philip Jefferson of Davidson College to serve as Fed governors. Although both Cook and Jefferson have impressive academic credentials, neither is a monetary economist. Cook’s writings are primarily in African American studies while Jefferson has written extensively on poverty. However, the Fed is tasked with overseeing the financial system, conducting monetary policy and providing services to the banking system. It’s stated objectives are controlling inflation, pursuing targets of full employment and stability in exchange rates. Typically, Fed governors have come from the banking system, the financial system and academia. But the typical academic has had expertise in macroeconomics, international economics, monetary theory and or financial institutions. Those not versed in these areas find themselves overwhelmed by the sheer volume of data and statistics used by the Fed governors to make decisions within the scope of the Fed’s duties. Prior Fed governors who have lacked relevant expertise have not fared well and have resigned early into their tenure. I remember one appointee saying that he had studied monetary economics since his appointment and was now well versed in its nuances after a couple of weeks. A senior Fed staffer when asked about the statement called the new governor “scary.” Although several of the Federal Reserve regional banks have recently held seminars on the impact on financial institutions by such trendy social issues such as income inequality and climate change, I seriously doubt if either Prof. Cook or Jefferson will have the clout to change the focus of the Fed Board to embrace “wokeness”. It will be interesting to see if they try.

 

I have never figured out why the term “elites” is used for the leaders on the left. There is nothing elite about Bernie Sanders, Chuck Schumer or AOC. Quite the contrary. They may be elitist but they are certainly not elite. A definition of “elites” is “a small group of powerful people who hold a disproportionate amount of wealth, privilege, political power, or skill in a group”. Well if that is the definition, then those commonly referred to as “elites” are certainly not elite.

The oracle-who-names obviously decided to change state colors after the 1994 election making Republican states “red states” and Democrat states “blue states”. Perhaps this is because red had always been associated with communists and this was an attempt to rebrand American democrats. If the democrat states were called “red” it would conjure up socialism, statism, and Marxism on a daily basis. Let’s call this the art of deception.

I wonder why this late in Covid do I find the vast majority of mask wearers are black? Maybe this is because most blacks are democrats and democrats are much more likely to wear masks than republicans.

I think that white democrats are more likely to wear masks because of their Klu Klux Klan roots.

This transgender stuff is getting ridiculous. I still say that one’s genitals should be the determining factor as to sports participation and bathroom/locker usage.

Want to bet now that the transgender swimmer’s eligibility is up that she (he) will return to being a male? Recall that she (he) still has his genitals and gets sexually aroused by women.

I don’t know why Penn where the transgender swimmer goes to school, doesn’t field a transgender basketball team, soccer team, track team and a transgender team in every sport. They would dominate Ivy League “women’s” sports.

Again, why are drag queens more attractive than transgender males (or is it females). Can you seriously look at Rachael Levine? Or for that matter Catlyn Jenner?

The media is going bonkers over the leak of Alito’s draft ruling on abortion. I thought the case was the 15 week Mississippi law. But it looks like the court is taking the opportunity to weigh in on Roe. The left is acting as if it is the end of civilization. But the court is taking the power away from the federal government and putting it back to the states. The issue has always been whether abortion was a constitutional right and not whether it was illegal, Repealing Roe just means that the states will make the law and not the courts. It will be nice to remove Roe from the courts.

All the noise surrounding the leaked opinion has featured pro-abortionists. Why no reporting on pro-life women? Some surveys show around 50 percent of women either are pro-life or favor some curbs on abortion.

If the democrats couldn’t define “woman” before the leak, then how do they now claim to defend awoman’s “right to choose?”

The leaker is likely to be on the staff of one of the liberal justices. My money is on Sotomayor – the so-called “wise Latina”. If found to be true then the leaker should go to jail and Sotomayor should be forced to resign.

Wouldn’t it be fun to have a debate with Marjorie Taylor Green, Matt Gaetz and Paul Gosar on one side and AOC, Corrie Bush and Ilhan Omar or the other?

I don’t understand super yachts.

What is “body wash”?

Random thoughts

The Wall Street Journal reported that the state of Massachusetts may take over the Boston city schools because of their dismal record of educating school kids. Despite a $1 billion budget only 25% of black elementary students read at grade level. However, I bet you that those kids are well versed on climate change, CRT and gender identity.

The Biden Administration has announced the formation of a dystopian  “Disinformation Governance Board” within the Department of Homeland Security. Weird. Are they going to monitor Jen Psaki and Tony Fauci and the rest of the purveyors of misinformation within this administration?

Hitler had an Office of Public Enlightenment. The Russians had a Special Disinformation Office. Harry Potter had an Office of Misinformation. Orwell’s 1984 had the Ministry of Truth. Now we have Biden’s Disinformation Governance Board.

Some Jokes

What do you call Joe Biden’s mother?

         Joe Mama

My mother always voted Republican but her mail-in ballot was cast for Joe Biden

         No way she would have done that if she were still alive

Joe Biden, Nancy Pelosi, Chuck Schumer and AOC were in a plane crash: who survives?

         The country

What do Joe Biden and Bill Cosby have in common?

         Neither can complete a sentence

What is a government mandate?

         Its when Joe Biden and Chuck Schumer go to dinner together

Is it true that when Biden was told he had to assemble a cabinet, he went to Ikea?

How do you get Biden to change a light bulb?

         Tell him Trump installed it.

The Squad always play the race card, Trans activists play the gender card, what is the democrats favorite card?

         The Trump card

What is the favorite nation of racists?

         Discrimination

What happens when you take a joke too far”

         The 46^th president of the United States

How do we know Joe Biden is a racist?

         He lives in the White House.

Why haven’t we seen any Biden hair plug jokes?

What does a socialist state lack?

         Rights.

Con is the opposite of pro which is why Congress is the opposite of progress.

Politically incorrect jokes

What do you get when you cross a Mexican with a civil rights novel?

         Tequila Mockingbird

Why did God invent golf?

         So white folks could dress up like blacks.

A black guy told me he has been a vegan for the past 10 years.

         I asked him “don’t you miss fried chicken?”

Why is do difficult to solve a redneck murder?

         All DNA matches

         No dental records

Why do blacks call white people “honkies”?
Thats the last noise they hear before the white people run them over.

What do you call a black wizard?

         A Negromancer.

Social media jokes

I’m starting a social media website for religious people with a lisp

Faithbook

My doctor refuses to post my diagnosis to social media…

He says my disease is untweetable..

Do you remember how before social media nobody cared what, where and with whom you ate?

Nobody still cares.

Until I went to the University of Konstaz am Bodensee to finish my dissertation for Ohio State, I did not drink any alcoholic beverages. I had my first beer at my high school senior picnic and spit it out. When I went to the University of Georgia, I was 17 years old and had a beer starting my junior year at a private club in Athens – Clarke County was a “dry” county” in those days. When the first light beers came out it tasted awful. There was a joke that it was sent to a lab and the report came back that “you horse has diabetes”. I didn’t drink wine because I always thought that wine tasted like grapes gone bad. However, living in Germany I discovered the local beer, Ruppana with its deep rich color and flavor. The beer was delivered to your door, like the milk of my youth, and left on your door step. It was wonderful. When I came back to the US, I stopped drinking beer because no commercially brewed mass marketed beer was to my taste. Then came the micro brews. I discovered that I really hated the trendy IPAs. To me it was merely a contest to see who could brew the bitterest beer. But it was the stouts and porters that were more to my tastes. So now I drink at most one stout or porter a day when I have a beer. Here are my favorites – I do not care for Guiness::

1. Split Shot stout – Elysian brewing company. Of course since this is my favorite, our local distributed stopped carrying it
2. Left Hand Nitro stout
3. Portly stout – Turtle Anarchy Brewing Company
4. Thunderstruck Coffee porter – Highland brewing company
5. Old Rasputin – North Coast Brewing Company

I also like some scotch ales namely old Chub from Oskar Blues and Yee Haw’s Eighty. By the way Yee Haw’s Velvet Charmer is to die for.

Isn’t it time to dump the Dow? Currently, the market is in sell off mode and the business channels are breathlessly reporting the fall in the Dow. However, I am less interested in the Dow than in how the overall market is behaving. Concentrating on the Dow is for rookies. Pros look at broader indexes and focus on stocks not on the Dow. So isn’t it time to dump the Dow?

The Dow is the closest watched (by much of the public and the business media) indicator of the stock market. Yet the Dow is made up of only 30 companies. It started out in 1884 comprised of nine railroads and two industrial companies. The value of the Dow is not the actual average of the prices of its component stocks, but rather the sum of the component prices divided by a divisor, which changes whenever one of the component stocks has a stock split or stock dividend, so as to generate a consistent value for the index. 

The components of the Dow change over time as some companies gain prominence and others lose prominence. Yet companies such as Amazon, Alphabet, Tesla and meta are not on the Dow. There are over 15,000 publically traded companies in the US with about 5,000 traded on the exchanges. Now it is understandable why there was such a small number on the Dow initially given the logistical difficulties of calculating a composite average for all publically traded firms. But that is no longer a problem. The Dow is top heavy with the highest priced stocks carrying more impact than the lowest priced stock. Recently, the biggest company in market cap Apple surged with the Dow falling. How could this happen? Its because Apple is not included in the Dow! So the question of the day is why not ditch the Dow and do something akin to the S&P 500 which accounts for market capitalization or the Russell 2000? Better yet, since we have the technology, why not include all stocks traded on all the major exchanges and have a weighted market cap average? Now that would be an accurate representation of what is happening in the market rather than citing an outdated anachronism of the past.

You know you are getting old when 

1. The TV shows you watch only air commercials about ED, debt reduction, class action lawsuits and stool softeners. 
2. On the stations you seldom watch, you haven’t a clue what anyone is talking about. 
3. On those stations, none of the commercials make sense.
4. Your grandchildren are in college. 
5. You haven’t a clue as to what is “body wash.”
6. All your favorite movies and music are by dead people.
7. You don’t understand all the tattoos and body piercing (particularly the nose rings/studs).
8. It finally dawns on you how smart your parents were.
9. Your grown children are having the same troubles with their kids as you had with them.

The FBI says that a Ponzi scheme is “a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors.”

Hum. Sounds like social security to me. Maybe this is why the Left is for open borders.

The pundits note that Biden’s approval ratings are in the 30s and some have wondered why is it so low. I on the other hand wonder why is it so high? How could anyone who is breathing approve of this president? I don’t know any of those supporters. Do you? 

Evidence that the Left is braindead is that Elizabeth Warren says that Democrats need to pass stalled agenda items in the next few months, otherwise they are “headed toward big losses in the midterms.” Huh? The reason that they are headed toward big losses is because of their agenda.

I guess the Democrats don’t believe all the polls about the coming election. Instead, they could easily avoid the impending disaster. All Biden has to do is lift the moratoriums on fossil fuels. Say “drill baby drill”, open up Federal leases, lower (instead of raising) royalties on leases, approve all the pipelines, repeal all the Covid mandates, keep quiet on CRT and gender identity, embrace charter schools, reinstitute “stay in Mexico”, keep Title 42 and announce funding for the wall. Sure the Left will go ballistic but they are not going to vote for any Republican. I bet that the poll numbers will flip and the Democrats might maintain control of the Senate if not the House.

One of the most laughable bumper stickers out there is the one that says “If you can read this, thank a teacher”. Are teachers really responsible for kids learning to read? If so then teachers are also responsible for kids not being able to read. My parents were teachers. Mom taught second grade. Dad taught biology and later became a high school principal. He also worked full time at night at the Post Office. So it might not be a surprise that both my brother and I could read before we stepped inside a school. The same is true for my kids and my brother’s kids. However, even a teacher would be able to teach our children to read. Why? It’s because my brother and I were “A” students with my brother being one of the smartest people that I have known and our children all have advanced degrees.

The inability of teachers to teach kids to read is blamed on the kids. Consider that the head of the Chicago teachers union once said that the increased accountability demanded by the city administration over the dismal performance of the school system was “unfair” because “poor kids can’t learn”! Of course this is nonsense. Consider that virtually all these students can recite every word to the most complicated rap after only three listenings. Indeed, some inner city teachers are using rap as a teaching tool in the classroom. If I were a parent in Chicago I would be on the warpath. My limited experience with local second graders convinced me that all children are able to read at grade level unless they have a learning disability. But most can’t.

A problem is that in the public school education system the students are the only ones without an advocate who holds the schools accountable for its failure. I know, you say “What about the board of education?” Or “what about the PTA?” If these were advocates for the students, then they would not tolerate the miserable reading and math scores in our schools. Lack of achievement is always laid at the feet of the students when the real culprit is the method of instruction utilized. The teachers are taught methods that have demonstrated failure. Sure, there are high achievers but studies show that these students excel regardless of the method employed. The Educational Industrial Complex – textbook authors, textbook publishers, colleges of education, accreditation boards and unions – has an invested interest in traditional methods of instruction and will defend them regardless of outcomes. Yet nontraditional methods such as Direct Instruction have been shown to produce proficiency rates in at-risk students that are equal to and often higher than those for students in high income districts. It’s time that we quit excusing the teachers and blaming the kids for failure for achieve. Although there is considerable merit in changing how we pay teachers whose salaries can be read off a chart that shows years and education, the main culprit is method of instruction. If we want kids to achieve, then we must blow up our current system used by our government schools. Although charter schools and private schools are an improvement, they still may be hampered by inflexible accreditation standards that have little to do with learning. Indeed, Direct instruction was rejected locally on the grounds that it would be rejected by the accreditation board because it required “too much reading”! 

If our schools were a corporation, the stockholders would shake up the board of directors and fire the CEO. Given the poor performance of our schools, especially those in lower income areas, I would reward the superintendent based on performance and terminate him if it did not improve. Surely, that would provide an incentive to do better. I only wish we could unleash American ingenuity and innovation on the school system. I would put out for bid contracts, collect the taxes and turn the school system over to private enterprise. The contracts would be reviewed periodically and if certain metrics were not met, then the contractor would be fired and a new one hired.

Americans are a polite and considerate people. Most of us do not riot when we want to protest an injustice. We usually keep go along with policies even when we do not like them. How else to explain that we will send our kids to schools wearing masks even though all the research tells us that kids are less affected by Covid than by the flu, that they are unlikely to transmit the disease and that wearing masks hampers their learning. If this were a policy to which that left were opposed, all hell would be raised. Its hard to imagine the 180 degree turn taken by the country in only one year. Here are some of the harmful – for most of us – policies of the current administration that bear the imprimatur of the left.

1. Climate change: no new pipelines, restrictions on drilling, encouraging financial institutions not to lend to gas and oil producers, cited climate change as an essential element of national security and foreign policy
2. Expansion of the welfare state: proposed dramatic increased in spending on Pell Grants, low income K-12 schools, low income housing assistance, equity plans for all federal agencies, changing funding formula to Obama Care.
3. Open borders: ended funding for the border wall, rescind the “Stay in Mexico” policy
4. $1.9 trillion Covid “relief” bill: Only 9% allocated to public health issues
5. $2.2 trillion “infrastructure” bill
6. Support for teaching of Critical Race Theory
7. Opposition of Florida bill limiting teaching of gender identity to K-3 students
8. Raising the corporate income tax, a millionaires tax, a wealth tax, an excise tax on pharmaceuticals, increasing the excise tax.
9. Mask mandates on federal property
10. Ending ban on transgenders in military
11. Raised minimum wage for federal contractors to $15 an hour
12. Established a White House gender policy council
13. Stops withdrawal from World Health Organization
14. Restart Iran nuclear agreement
15. Pauses student loan repayments
16. Extends foreclosure moratorium
17. Rejoins Paris climate accord
18. Rescinds Trump’s 1776 Commission that was established as a counter to the New York Times 1619 Project
19. Required noncitizens to be included in the Census
20. “Build Back Better” progressive wish list
21. Soft on crime
22. Attempts at rescinding the Second Amendment
23. Federal takeover of elections
24. Commission to study the packing of the Supreme Court
25. Universal pre-K, free community college, expansion of child tax credit
26. Increased regulatory burdens at a cost of $100 billion annually

Did I miss anything? But if you think that all this is not enough, the progressive democrat caucus has given Biden a list of 55 items that they want imposed by executive action. Note that Biden has issued more executive orders than any previous president by a large margin. The progressives want him to issue even more.

Many pundits are telling us that the Republicans taking control of the House and the Senate in the midterm elections will derail the progressive agenda. Well it won’t. Virtually all of the items above came via executive orders. Republicans can derail legislative initiatives and can control fiscal expenditures. But any effort to derail executive orders will fail because there will not be 60 senators that will vote to override the president’s orders.

Apparently you can’t get Covid or transmit it if you are eating or drinking. Why else are you forced to wear a mask on an airplane or in a terminal unless  you are eating or drinking?

Kamala Harris must be pretending to be a buffoon. Remember she was attorney general and then a senator from California so its hard to believe that she is as stupid as she appears.

I was wrong. I thought when Biden said in the debates with Trump that he would end fossil fuels, he would lose all the high energy producing states and lose the election. Yet he won Pennsylvania, New Mexico and Colorado. Go figure.

Seventy percent of black students in college are women. What does this portend? Typically, women do not marry men with less education. This means that when college educated black women look to marry men with equal or greater education, for many, this means white men. Two prominent examples are Kamala Harris and Judge (soon to be Justice) Kentanji Jackson Brown.

Antony Fauci’s ever changing advice reminds me of the story about Albert Einstein who was asked by one of his assistants if he realized that he had just given the same exam to his class that he had given one year ago. Einstein said yes he knew it was the same exam, but the answers had changed.

It seems to me that the support by the leaders of the democratic party of the few transgender individuals and gender identity has signaled an end to their support of the women’s movement. Indeed, it seems that they have even abandoned the use of the word “women”. Birthing people? Give me a break.

The iphone has a male pregnant emoji.

Why don’t conservative stockholders raise hell at the annual meetings of woke corporations?

I just read where several women at a prison in New Jersey have become pregnant after having sex with inmates who are biological males identifying as females. It seems to me that transpeople should have the genitalia of the gender that they identify with before being given the status of the other sex.

The trans swimmer who was mediocre as a male and a champion as a female is 6’3”, powerfully built and still has male genitalia and has sex with women. Is she (he) considered a lesbian? I would wage that since she (he) has used up her (his) eligibility at she (he) may likely transition back to being a male.

The newly anointed Supreme Court justice in waiting would not define a woman. I guess that she could not even say as did Justice Potter Stewart on obscenity “I know it when I see it.”

Why is it that female impersonators are in the main more attractive than transfemales?

There are an increasing number of cites on the internet of school children identifying not just as a different sex but as animals (mainly dogs and cats). See https://www.youtube.com/watch?v=FYxEfIFpugg. While there have been assertions that some school districts are accommodating such students – called “furries” most of those assertions have been shown to be false.

“Fair” and “fare” have to be the most confusing words in the English language. How are they even pronounced the same is beyond me. “Fare” can be a noun or a verb and as each have wildly different meanings. “I paid the fare for the bus.” “The provincial fare of southern Italy is delicious.” “How did you fare on the exam?” Or even “I fared forth toward town.” As to “fair”: “I got a fair shake.” “Just to be fair, I gave them my bonus.” “The ball landed in fair territory.” “She is fair-skinned.” “She tutored a fair amount.” “It is a fair day.” “Today there is a fair wind.” “Let’s go to the fair.” Oh and lest we forget the word “fairing” which has nothing to do with any of the above. 

How can meatless products be advertised as plant based meats?