Category Archives: Economics

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I take no joy in seeing Washington Post employees getting laid off

I’ve said it before: I really love newspapers! I delivered the Lexington Herald and the Lexington Leader — now combined as the Lexington Herald-Leader — when I was in junior high and high schools, and, being hearing impaired, I find it much easier to read the news than to watch and listen to it on television. More, television news stations are in the business of presenting stories which happen right away, stories which have a strong visual component. Only newspapers have the capacity to dig more deeply, to present more information than people can get from a thirty-second story on television; that’s just the nature of the different media forms. With the switch to a mostly digital format, newspapers are no longer stuck with assigned story length, save in the actual print editions.

More, running a conservative blog as I do, I like to cite credentialed media publications with a liberal reputation as my sources; this insulates me from criticism that my sources are somehow untrustworthy because they are conservative themselves.

And this is why I have been discouraged to learn about the pending layoffs at The Washington Post, and why I don’t share in the schadenfreude of others like Breitbart:

‘Mood Is Really Grim’ at Imploding Washington Post

by John Nolte | Thursday, December 15, 2022

More bad news is coming from the imploding Resistance Force that calls itself the Washington Post.

On Wednesday, Breitbart News informed you that the Washington Post, a far-left propaganda outlet devoted to spreading lies and conspiracy theories, has lost 500,000 subscribers since January 2021. This drops its subscription base to just 2.5 million.

The Post also announced to its staff of entitled Resistance Babies on Wednesday that layoffs were coming to its 2,500-person workforce. No numbers were yet available on the layoffs. All we know is that it will be a single percentage (1 to 9 percent) of the current workforce.

The response from our journalist elites was exactly what you’d expect from entitled babies:

There’s a lot more at the original, and Breitbart is not behind a paywall, so I’m not asking anything big for you to check out the rest yourselves. The Post’s own story is behind the paywall, so if you aren’t a subscriber, you won’t get more than a couple of paragraphs, unless you haven’t tried to access Post stories recently; you do get a couple of freebies every month.

The Washington Post announces more job cuts next year

The announcement comes amid a season of layoffs throughout the media industry and weeks after the paper said it will eliminate its stand-alone magazine

By Elahe Izadi and Sarah Ellison | Wednesday, December 14, 2022 | 2:31 PM EST | Updated: 6:21 PM EST

The Washington Post will continue to eliminate jobs early next year, Publisher Fred Ryan said Wednesday, weeks after the paper announced it will shutter its Sunday magazine and lay off 11 newsroom employees.

Ryan said at a companywide meeting that the cuts will probably amount to a “single-digit percentage” of the company’s 2,500 employees but did not provide specifics. He added, though, that the company will add new jobs to offset the loss of positions that are “no longer serving readers,” and that The Post’s total head count will not be reduced.

Later, in an email to staff, Ryan said that the plan to cut jobs “in no way signals that we are scaling back our ambitions” but that “like any business, The Post cannot keep investing resources in initiatives that do not meet our customers’ needs.”

The publisher walked out of the meeting after dozens of employees raised their hands and peppered him with questions. Plans for job cuts will be finalized “over the coming weeks,” Post spokeswoman Kathy Baird said in a statement.

The development comes during a difficult season for media workers, as companies across the industry have laid off workers and instituted hiring freezes. Citing “economic head winds” as a factor last month, The Post’s executive editor, Sally Buzbee, announced the newspaper will end its weekly stand-alone magazine, along with the jobs of its 10 staffers. The magazine’s last issue will publish Dec. 25. The company also eliminated the job of Pulitzer Prize-winning dance critic Sarah L. Kaufman. None of those employees were offered new roles at the paper.

During Wednesday’s employee meeting, Ryan cited a difficult economic environment, particularly for companies reliant on advertising, and he acknowledged that “for those people whose positions will be eliminated, this will be a difficult time.”

There’s more at the original.

In this, I think of my favorite reporter, the Post’s Heather Long. I became familiar with her work when she was an economics reporter for CNN, and appreciated it for one simple reason: I could not tell, from her reporting, whether she was conservative or liberal, Republican or Democrat. And if I couldn’t tell, that meant she wasn’t pushing an agenda in her reporting; that’s the kind of thing that, for me, distinguishes between a journalist and a journolist.[1]The spelling ‘journolist’ or ‘journolism’ comes from JournoList, an email list of 400 influential and politically liberal journalists, the exposure of which called into question their … Continue reading

I’m not too worried about Miss Long’s job: she has, in a fairly brief time, worked her way up from being an economics reporter to one of the Post’s columnists and Editorial Board members. But she left CNN, and CNN later experienced layoffs, and now she’s with the Post, and they, too, are seeing layoffs.

So, what’s up? Miss Long, along with data analyst Andrew Van Dam, reported in June of last year that a lot of different types of businesses had responded to the panicdemic — and no, that’s not a typographical error; I spelled it exactly the way I believe it should be spelled — by offering subscription services, for all sorts of things:

Subscriptions boomed during the coronavirus pandemic as Americans largely stuck in shutdown mode flocked to digital entertainment and signed up for regular home delivery of boxes of items such as clothes and chocolate. But what really set the past year apart was the increase in subscriptions in the hard-hit services sector. Owners of restaurants, hotels, home-repair companies and others upended their traditional business models to try subscriptions and often found more interest — and revenue — than they anticipated.

“This was really about flipping the business model for restaurants: paying before eating instead of eating before paying,” said Vinay Gupta, a winemaker who spearheaded the Summerlong Supper Club in Washington and New York City.

Upon reading that, my first thought was: if people are paying restaurants before eating, how are the restaurant employees who depend on tips going to survive? But, further down:

The typical U.S. consumer now has two to three subscriptions, according to user data from budget app Mint and research by Tien Tzuo, author of “Subscribed” and chief executive of subscriptions platform Zuora.

There’s a growing trend of “power subscribers” with 10 or more recurring payments, according to budgeting app Truebill. The app’s users average 17 subscriptions and typically spend $145 a month, according to an analysis Truebill did for The Washington Post. Last spring during the shutdowns, Truebill users averaged 21 subscriptions, as people tried different entertainment, home workout and delivery services.

Perhaps, just perhaps, with inflation having spiked, and even with it coming down recently, has outpaced the average weekly earnings of Americans, some Americans are starting to dump some of those subscriptions? The Post had more than three million digital subscribers at the end of 2020, but were down to 2.7 million by October of 2021, and around 2.5 million now. Maybe the Post needs to find a way to make it more valuable to customers than Hulu?

Me? Miss Long turned me on to a $99.00 per year subscription in 2017, which increased to $104.94 in 2020, a 6.00% increase, and I’m now scheduled to be billed $120.00 next August, a 14.35% bump. Yeah, I’m still going to pay it; it’s still a lot cheaper than my subscription to The New York Times, at $17.00 every four weeks, or $221.00 a year, $5.49 a week, or $285.48 a year to The Philadelphia Inquirer, — which also wants federal government subsidies to support the newspaper industry — or the utterly hideous amount I pay for The Wall Street Journal.

Still, a question has to be asked: why is The Washington Post, one our nation’s premier newspapers, and one of the four listed ‘newspapers of record,’ starting to lose subscribers, and money? What must the Post differently to attract more readers, more paying readers, so that the newspaper starts to make money again? John Nolte blamed it on the liberal bias he sees in the Post, and their continued bias against Republicans and supporters of former President Trump. The New York Times said, “As the breakneck news pace of the Trump administration faded away, readers have turned elsewhere, and the paper’s push to expand beyond Beltway coverage hasn’t compensated for the loss.” Nevertheless, the Times also noted, “two of The Post’s top competitors — The New York Times and The Wall Street Journal — have added subscriptions since Mr. Trump left office.”

There are real differences between the two New York newspapers and the Post. A city of 8½ million people is a heck of a lot bigger market from which to draw, and The Wall Street Journal is a specialty publication which meets different needs, and appeals to a different customer base. But when the Post, supposedly the number one newspaper for reporting on our federal government, returns zero relevant returns on a site search for Sam Brinton, the ‘gender fluid, non-binary’ former Deputy Assistant Secretary of Spent Fuel and Waste Disposition in the Office of Nuclear Energy who was fired for stealing suitcases from airports, it starts to look as though the newspaper either has a truly pathetic search engine, or is covering up for the utter embarrassment that Mr Brinton has brought upon the Biden Administration.

CNN’s online content is free, as is content from Fox News and MSNBC. Print newspapers, as they transition to a digital subscription medium, have to find ways to compete with free. The New York Times seems to be doing so, even if few other newspapers are, so the Post should be able to as well.

References

References
↑1 The spelling ‘journolist’ or ‘journolism’ comes from JournoList, an email list of 400 influential and politically liberal journalists, the exposure of which called into question their objectivity. I use the term ‘journolism’ frequently when writing about media bias.
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Bidenflation How many of those 81,283,501 people who voted for Joe Biden would have done so if they'd known they'd be five percent poorer in two years?

You may have heard the supposedly good news: the year-over-year inflation rate declined to 7.1%:

Consumer prices rose last month at the slowest 12-month pace since December 2021, closing out a year in which inflation hit the highest level in four decades and challenged the Federal Reserve’s ability to keep the U.S. economy on track.

The Labor Department on Tuesday said that its consumer-price index, a measurement of what consumers pay for goods and services, climbed 7.1% in November from a year ago, down sharply from 7.7% in October. The pace built on a trend of moderating price increases since June’s 9.1% peak, but it remained well above the 2.1% average rate in the three years before the pandemic.

There’s a lot more in The Wall Street Journal’s original.

Of course, the inflation rate only makes sense when compared to earnings. According to the Bureau of Labor Statistics, Table B-3, average private sector hourly earnings increased from $31.23 in November of 2021 to $32.64, a 5.09% increase, while average weekly earnings moved from $1,086.80 to $1,129.01, which was only a 3.88% increase. Compared to hourly wages, the average American worker is 2.01% poorer, in real terms, than he was in November of 2021; compared to average weekly earnings, he’s 3.22% poorer.

That isn’t the whole story. From November of 2020 to November of 2021, Table B-3 Historical Tables, average wages increased from $29.95 to $31.23, a 4.27% increase, while average weekly earnings went from $1,031.82 to $1,086.80, a 5.33% rise. Remember: this was moving from a COVID-19 restricted economy to one where almost all of the restrictions had been removed. But the November 2021 year-over-year inflation rate was 6.8%.

So, not only was the average American worker 3.22% poorer in November of 2022 than he was a year earlier, that’s on top of being 1.47% poorer, in real terms, the previous year. Due to the compounding effect of the math, average consumer prices were 14.38% higher in November of 2022 than in November of 2020,[1]1.068 x 1.071 = 1.1438 while average weekly earnings were 9.42% higher. That’s a loss of real earning power of 4.96%.

I wonder how many of those 81,283,501 people who voted for Joe Biden in November of 2020 would have done so if they’d known they’d be five percent poorer in two years.

And it’s going to get worse:

The figures leave the Fed on track to lift interest rates by 0.5 percentage point on Wednesday, following larger increases of 0.75 point at their past four meetings.

So, while economists anticipate home prices to start to fall, as demand is lowered due to higher interest rates, that does not mean that rent prices will fall. If the demand for buying homes declines, the demand for rental property necessarily increases, and that means higher rents. Rent increases for existing tenants normally occur just once a year, but rental increases for people moving during the year can and do occur at any time.

In 1849, Scottish writer Thomas Carlyle called economics the dismal science, and in a lot of ways, he was right. Economic reduces things to numbers, and a lot of people don’t like that, but it doesn’t mean that the numbers aren’t true.

The numbers I gave were averages, and I’m sure that many of the 81,283,501 Biden voters have managed to weather the inflation of the past two years reasonably well. But for every Biden voter who hasn’t had a problem with inflation, there’s another who has had Bidenflation eat up more of his earnings than the average. For every Biden voter who hasn’t seen any appreciable loss of economic well-being, there’s another who is worse off than the already-depressing averages.

References

References
↑1 1.068 x 1.071 = 1.1438
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What Are The Democrats Three Main Economy/Inflation Plans Now That They Kept The Senate?

At the time of writing this, the GOP has 217 wins for the House, and just need one more for control, and they’re leading in 4, with a few others being close. Be thankful, because the Democrats plans are as bad now as they were prior to the election

Now that Americans elected Democrats to keep the Senate, here are their 3 major plans to fix the economy and fight inflation

…

The House is still too close to call, and in the event of a Republican takeover, a blue Senate will have limited power. They would be able to confirm Biden’s judicial and executive branch nominees but not pass significant new legislation on partisan lines. Still, Democrats have heralded the victory as voters’ rejection of far-right extremism, and their desire to see abortion rights and fair elections safeguarded.

Those may be the big takeaways, but Democrats locking down the Senate — and likely only conceding a slim majority to Republicans in the House — also indicate that voters favor Democrats’ plan to rein in a tumultuous economy.

I seriously doubt that. Every poll stated that Americans trusted Republicans more than Democrats. The results were surely about many other things. When Independents and squishy Democrats say Democrats are doing a poor job, well, sure, let’s do the same

Supporting Biden’s spending, such as the IRA and a restored Child Tax Credit

Republicans on the campaign trail blamed Biden’s spending for the country’s inflation problems, arguing that the $1.9 trillion American Rescue Plan has been one of the major instigators. Experts say that if it was, the impact wasn’t significant. Still, the GOP similarly united against Biden’s Inflation Reduction Act.

But public favor for the legislation was solid out of the gate, with a Reuters/Ipsos poll from August showing broad support for individual measures of the Inflation Reduction Act, even if Americans were divided on the package as a whole.

Yeah, the ones that give them money directly. Mostly, voters say it won’t make a difference on inflation or reducing the cost of energy, clothes, food.

Tackling corporate profits as an inflation-fighting measure

Several of the Democrats who achieved close wins slammed corporations for enjoying record profits over the last few years without easing the burden for consumers amid record inflation.

So, class warfare. It won’t make a damned bit of difference, and could drive up prices and reduce jobs, but, it’ll whip the moonbats up for 2024.

Making healthcare more affordable by expanding Medicare and lowering drug costs

Democrats spent the back half of their midterms pitching themselves as strongholds for entitlement programs like Medicare and Social Security, and framing Republicans as a threat.

So, more government. Which won’t actually reduce costs. Wasn’t Obamacare supposed to do that? And hasn’t? This is a plan to continue driving prices up, or, at least, keeping them high. Notice there is nothing in their plan about increasing affordable energy. Of course, they’ll get nothing done, because the House controls the purse strings. If the GOP is wise (always an iffy proposition) they’ll focus on the economy, energy, crime, and the border. Don’t try and pass abortion stuff. No impeachment stuff. Minimize investigations into Biden. That plays to the base, and ends up being a lot of inside baseball.

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NY Times Is Here To Tell You How To Save Money On Your Biden Inflated Power Bills

This is what it’s come down to: the Times and so many other Credentialed Media outlets telling you how to maybe save money, rather than castigating the Government to stop being part of the problem, namely, policies that cause energy prices to go higher (paywalled Times article here)

How to Save on High Heating Bills This Winter

The cost of heating a home is expected to spike this winter as higher prices for natural gas and heating oil combine with a forecast for slightly colder weather than last winter.

But financial help is often available for paying bills as well for updating heating systems to more efficient models. There are also steps to take to conserve energy.

The average cost of heating a home is estimated to rise almost 18% from last winter, to $1,208, according to the National Energy Assistance Directors Association. The group coordinates state policy for federal grants that help low-income families pay heating and cooling bills.

The estimated seasonal bill for natural gas, which about half of Americans use to heat their homes, is $900, up 25% from last winter, according to the most recent data from the federal Energy Information Administration. Natural gas has become pricier because of factors such as greater demand for cooling during this year’s scorching summer (natural gas powers plants that produce electricity to run air conditioners) and surging exports, the administration said.

The seasonal bill for heating oil, which is common in New England, is estimated to be $2,694, up about 45% from last winter.

It’s due to Wuhan Flu and to the policies of Joe Biden and his Democratic Party comrades, who keep doing things that create problems, both before and after COVID. The U.S. really doesn’t get much from Russia, we have our own supplies.

Help with heating bills is available for low-income families. The Biden administration is distributing $4.5 billion for the federal Low Income Home-Energy Assistance Program, which provides grants to states to help residents pay their energy bills. But, Wolfe said, overall funding is lower than last year, under a pandemic relief program, and more federal money may be needed.

Well, that only helps folks making around $20K or less. What about the rest of us?

Consumers can take steps now to prepare for the winter and conserve energy. “It’s November; there’s still time to get ready,” Wolfe said. Heating contractors are typically less busy right now, he said, before temperatures plummet.

The most widely recommended step: Schedule a professional checkup of your heating system. A tuneup is advisable because dirty components reduce airflow, blunting performance and possibly damaging the system, according to ASHRAE, a professional association of heating and cooling professionals. A tuneup typically costs $200 or more, but some utilities cover the cost.

So, spend money to save a little

If your home has a lot of windows, particularly older ones, you may be losing energy through the glass. One easy fix, he said, is to stick clear plastic Bubble Wrap — the kind used to ship packages — over the windowpanes. (Spray the glass with water first so the wrap sticks.) It won’t look great, he conceded, but it will save you money.

Really? This is their idea? Bubble wrap? I feel like it’s the 1930s or something

You could consider replacing an old heating system with a more efficient model. The costs range from $4,000 to $7,000 for a gas furnace and from $5,500 to $40,000 or more for some heat pump systems, according to estimates provided by contractors in western and central New York state.

They seriously wrote $40,000. Is this with your $20K solar panels and $56K EV?

Meanwhile, here’s CNET on the perfect setting for your winter thermostat

According to the US Department of Energy, it’s best to keep your thermostat at 68 F for most of the day during the winter season. For maximum efficiency, you should also designate eight hours per day during which you turn the temperature down by between 7 and 10 degrees. By following this routine, you may again be able to reduce your yearly energy costs by up to 10%.

Who’s up for keeping your casa at 58-61?

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The plague of public-sector unions

It was actually a minor line in an article by Robert Stacy McCain about Democrats not accepting election results that didn’t go their way, but one I found very important:

Government employee unions are a conspiracy against taxpayers, and when the people of Wisconsin elected (Scott) Walker to fight these unions, Democrats refused to accept the legislative consequences.

As it happens, I still have a Scott Walker t-shirt, from his failed campaign for the 2016 Republican presidential nomination. Yeah, it’s pretty worn and threadbare, but it’s still good for work around the farm in hot, humid Kentucky summers.

Economically, unions in the private sector have to, in the end, be partners with the unionized businesses, because businesses can fail. If the unions demand so much that the business cannot make a profit, the business fails and the unionized employees’ wages drop to $0.00 per hour. And as much as some union leaders hate business, see themselves opposed to corporations, they do realize that a $0.00 per hour wage is possible if they drive the business out of business. Sometimes those private sector unions don’t get it right, as the bankruptcy and failure of Hostess brand demonstrates.

But public-sector unions are different, because the public sector cannot be driven out of business! Where private companies are trying to sell their products to customers who have the ability to choose to buy or not buy their goods, the public sector takes in its revenue through taxation, which is enforced by the law, and ultimately, by law enforcement. If public-sector unions demand so much that the government agencies cannot afford it under their current revenues, the government has the option of raising taxes, to increase its revenues at, in the end, the point of a gun.

Governor Walker tried fighting the public-sector unions, and succeeded, sort of, for a brief time. Governor Matt Bevin (R-KY) tried to get the Commonwealth’s rising retirement indebtedness under control, and the teachers’ unions went absolutely ape, and campaigned so vigorously against him that he lost his bid for re-election, in a very red state, to the odious — anyone who can simply suspend our constitutional rights and get away with it is by definition odious — Andy Beshear, 709,577 (49.20%) to 704,388 (48.83%), a margin if just 5,189 out of 1,442,390 ballots cast.

Public-sector unions have so much power because they are workers in an ‘industry’ that cannot fail, and they are bargaining for contracts with people who have little experience in business and no pressure to keep the ‘company’ in business. That’s why Virginia has become a ‘blue’ state, as wealthier federal government workers have metastasized into northern Virginia, and why public-school teachers are paid significantly more than the median income in the districts that support them.

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The Fed finally admits it: they don’t know what they are doing! Fighting Bidenflation by causing a recession

The Federal Reserve’s Board of Governors once again raises interest rates to try to fight inflation, but they’ve admitted what people who pay attention to economics already knew: the Board don’t really know what they are doing, or what effects their decisions will have. From The Wall Street Journal:

Fed Approves Fourth 0.75-Point Rate Rise, Hints at Smaller Hikes

Officials signal a possible slowdown in the pace of rate rises by acknowledging how increases influence the economy with a lag

by Nick Timiraos | All Soul’s Day, November 2, 2022 | 2:31 PM EDT

WASHINGTON—The Federal Reserve lifted interest rates by 0.75 percentage point to combat inflation and signaled plans to keep raising them, though possibly in smaller increments.

Members of the Fed’s rate-setting committee acknowledged Wednesday that it could take time for their rate increases this year to be reflected in the economy, and they indicated they might reduce the size of coming hikes. “In determining the pace of future increases in the target range, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation,” they said in a statement released at the conclusion of their two-day meeting.

Fed Chairman Jerome Powell, at a news conference Wednesday, said officials could consider approving a smaller 0.5-percentage-point increase in December or January, but they had made no decision yet. He added, however, “The question of when to moderate the pace of increases is now much less important than the question of how high to raise rates and how long to keep monetary policy restrictive.”

Officials are boosting interest rates at the fastest pace since the early 1980s to reduce inflation that is running near a 40-year high. They have raised rates by 0.75 point at four consecutive meetings, with the latest one taking the central bank’s benchmark federal-funds to a range between 3.75% and 4%.

If the Board of Governors recognize that it takes time for their increases to do what they project will happen, why go for such large increases? Stock prices fell following release of the interest rate hike, even though the 75 basis point increase had been widely anticipated. Had the Fed increased the rate by only 50 basis points, stocks would almost certainly have risen, which would lift the value of the retirement accounts for most people. As it is, the Fed made retirees and those close to retirement age poorer, at least on paper.

Thirty-year fixed mortgage rates topped 7% last week, as Freddie Mac reported the average was 7.08%, rising from 6.94% the previous week. The last time rates were above 7.00% was in April of 2002. At this point in 2021, the average rate was 3.14%.[1]As I previously noted, we bought a house last December, which was negotiated in November, and the interest rate would have been 2.75%. However, since we weren’t going to be living in the house … Continue reading So, while the increase in home prices has moderated, the cost of buying a house is increasing due to the interest rate hikes.

The Fed wants to rein in inflation, but do so without causing a steep recession. Yet the Board of Governors keeps making 75 basis point increases — four in a row now — when they admit that they do not know exactly what the effects on the economy will be and that we won’t be able to see, or measure, them for a year.

The last time inflation was at the rates we have seen for the last year was during Jimmy Carter’s stagflation of the late 1970s into 1980. Inflation was beaten then the hard way: with a steep and painful recession in 1981-82. And that’s what will happen again, regardless of what the Fed tries to do.

References

References
↑1 As I previously noted, we bought a house last December, which was negotiated in November, and the interest rate would have been 2.75%. However, since we weren’t going to be living in the house — it’s rental property for my sister-in-law — the rate became 3.75%.
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If a private business did its accounting the way the Fed does, in which federal prison would the business’ chief financial officer serve his sentence?

While you sometimes see decent stories on economics in The New York Times and The Washington Post, The Wall Street Journal is really the place to go.

Higher Interest Rates Fuel Losses at the Federal Reserve

The central bank is now paying out more in interest expenses than it earns in interest income

by Nick Timiraos | Hallowe’en, October 31, 2022 | 5:30 AM EDT

The Federal Reserve’s aggressive interest-rate rises to fight inflation are leading the central bank to do something it has never consistently done before: lose money.

The central bank’s operating losses have increased in recent weeks because the interest it is paying banks and money-market funds to keep money at the Fed now exceeds the income it earns on some $8.3 trillion in Treasury and mortgage-backed securities it accumulated during bond-buying stimulus programs over the past 14 years.

The paywall hits right here; aren’t you glad you have a writer shelling out his hard-earned money to subscribe for you?

Of course, that $8.3 trillion in Treasury and mortgage-backed securities it accumulated were accumulated via ‘quantitative easing,’ in which the Fed spent money it didn’t actually have, but, with no one to bounce the ‘checks’ — not that checks are written anymore; it’s all done with electronic funds transfers — the money was just ‘created.’

The losses don’t interfere with the Fed’s ability to conduct monetary policy, and they follow years in which the central bank earned profits of around $100 billion, which it sent to the U.S. Treasury. Those remittances reduced federal deficits, and as they end, the federal government could face marginally higher borrowing needs.

If the Fed runs sustained losses, it won’t have to turn to Congress, hat in hand. Instead, it will simply create an IOU on its balance sheet called a deferred asset. When the Fed runs a surplus again in future years, it would first pay off the IOU before sending surpluses to the Treasury.

And there you have it: unlike regular banks, which would have to borrow money from someone else, incur a real liability that they’d hope to be able to pay off in the future, our central bank simply creates “a deferred asset,” something that you or I or commercial banks can’t just do. If a If for some reason the Fed didn’t run a surplus again, the deferred assets would simply be deferred longer.

In accounting for real people, a deferred asset is something very different:

A deferred asset is an expenditure that is made in advance and has not yet been consumed. It arises from one of the following two situations:

  • Short Consumption Period: The expenditure is made in advance, and the item purchased is expected to be consumed within a few months. This deferred asset is recorded as a prepaid expense, so it initially appears in the balance sheet as a current asset.
  • Long Consumption Period: The expenditure is made in advance, and the item purchased is not expected to be fully consumed until a large number of reporting periods have passed. In this case, the deferred asset is more likely to be recorded as a long-term asset in the balance sheet.

In other words, a deferred asset in the real world is something completely opposite of what the Fed could do. In the real world, a deferred asset is created when an individual or business spends money it already has for something before that something is actually acquired. What the Fed would do is claim that money that it is spending that it does not have is an asset it will have in the future. A private business could take out a loan, based on anticipated future revenues, but to simply declare that the asset is there just doesn’t work.

If a private business did that, the Chief Financial Officer would go to jail.

The arrangement is akin to an institution facing a 100% tax rate and offsetting current losses with future income, said Seth Carpenter, chief global economist at Morgan Stanley.

The losses stem from some obscure monetary plumbing. The Fed’s $8.7 trillion asset portfolio is full of mostly interest-bearing assets—Treasury and mortgage securities—with an average yield of 2.3%. On the other side of the ledger—the liability side of the Fed’s balance sheet—are bank deposits held at the Fed known as reserves and overnight loans called reverse-repurchase agreements.

Before the 2008 financial crisis, the Fed kept its portfolio relatively small, at less than $1 trillion. Its main liability was the amount of currency in circulation. The Fed shifted reserves up and down in incremental amounts if it wanted to lower or raise short-term interest rates.

After the crisis, the Fed cut interest rates to zero and purchased large quantities of bonds to provide additional economic stimulus. Those purchases flooded the banking system with reserves. To maintain control over interest rates with a larger balance sheet, the Fed revamped the way it manages rates. The new system, which was already in use by many other central banks, controlled short-term rates by paying interest on bank reserves.

For the past decade, relatively low short-term interest rates meant the Fed earned more on its securities than it paid out as interest on reserves or other overnight loans. After covering its expenses, the Fed last year handed back about $107 billion to the government.

Did you understand all of that? Well, the WSJ commenters were almost all laughing at the article, with at least one CPA noting that this was the way to jail for a private corporation.

The United States gets away with this because the dollar is the world’s reserve currency, and our debts are all denominated in dollars. Five American territories and eleven independent nations use the dollar as their official currency. We can always pay our debts, because we control our own currency, and the ‘checks’ are all written on a ‘bank’ that doesn’t bounce them. But I’m old enough to remember when OPEC floated the trial balloon of requiring payment in euros rather than dollars, and the panic concern to which that led. In one way, the entire world’s economic system is being propped up by the United States Federal Reserve. But if we keep up with the acco9unting tricks, that could change.

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Joe Biden has earned exactly what he’s getting from Saudi Arabia Are there no adults in the White House?

We have previously noted that the oil production cut by OPEC+ was primarily engineered by Russia and Saudi Arabia, and that President Biden’s statements condemning Saudi Crown Prince Mohammed bin Salman, the country’s de facto ruler, might not have exactly persuaded that nation to work charitably with the United States. Now, from Business Insider:

The US and Saudi Arabia traded petty insults in an feud over oil after a reported secret deal fell apart

by Tom Porter | Thursday, October 27, 2022 | 7:00 AM EDT

A US official mocked a comment by a Saudi prince who claimed the White House was acting immaturely, the latest exchange in an embarrassing feud between the nations over oil.

“It’s not like some high school romance here,” John Kirby, the communications coordinator at the National Security Council, said when asked about a comment by Saudi Energy Minister Prince Abdulaziz bin Salman.

The prince had criticized the White House for releasing some of its vast oil reserves to reduce prices, painting the move as childish and describing Saudi Arabia as the “maturer” country.

Kirby was not happy. “We’re talking about a significant, important bilateral relationship, a partnership that has survived over 80 years,” he said. “I don’t think talking about it in terms like that necessarily lends the gravity of how important this relationship is, to the way that we’re considering it.”

The New York Times reported on it from a different angle:

U.S. Officials Had a Secret Oil Deal With the Saudis. Or So They Thought.

After Saudi leaders pushed to slash oil production despite a visit by President Biden, American officials have been left fuming that they were duped.

By Mark Mazzetti, Edward Wong and Adam Entous | Tuesday, October 25, 2022

WASHINGTON — As President Biden was planning a politically risky trip to Saudi Arabia this summer, his top aides thought they had struck a secret deal to boost oil production through the end of the year — an arrangement that could have helped justify breaking a campaign pledge to shun the kingdom and its crown prince.

It didn’t work out that way.

Mr. Biden went through with the trip. But earlier this month, Saudi Arabia and Russia steered a group of oil-producing countries in voting to slash oil production by two million barrels per day, the opposite of the outcome the administration thought it had secured as the Democratic Party struggles to deal with inflation and high gas prices heading into the November elections.

So, President Biden went through with what the Times called a “politically risky trip”, but while on that trip, raised the Jamal Khashoggi killing at the very beginning:

“I raised it at the top of the meeting, making clear what I thought at the time and what I think of it now,” Mr. Biden said. “I was straightforward and direct in discussing it. I made my view crystal clear. I said very straightforwardly for an American president to be silent on an issue of human rights is inconsistent with who we are and who I am. I always stand up for our values.”

He reported that Prince Mohammed, often known by his initials M.B.S., denied culpability.

“He basically said that he was not personally responsible for it,” Mr. Biden said. “I indicated that I thought he was.”

Somehow, some way. no one in the Biden Administration was adult enough to realize that the President’s supposedly private conversations with the Crown Prince, which Mr Biden then reiterated publicly, might just sabotage the deal that had been previously negotiated to help “justify breaking a campaign pledge to shun the kingdom and its crown prince.”

The move led angry Biden administration officials to reassess America’s relationship with the kingdom and produced a flurry of accusatory statements between the two governments — including a charge by the White House that Saudi Arabia was helping Russia in its war in Ukraine.

Lawmakers who had been told about the trip’s benefits in classified briefings and other conversations that included details of the oil deal — which has not been previously disclosed and was supposed to lead to a surge in production between September and December — have been left fuming that Crown Prince Mohammed bin Salman duped the administration.

An obvious point: the Arabs have a completely different culture than do Americans — yes, I know: we Americans do not really seem to have just one culture ourselves — and perhaps it shouldn’t have been expected that the Crown Prince would shrug off a little public insult the way Americans seem to believe he should have. Mr Khasoggi’s murder was arranged sometime after the Saudi exile, who wrote for The Washington Post, essentially called Mr bin Salman a liar. It was a political risk for the Crown Prince to arrange, order, or at least suggest — “Will no one rid me of this turbulent priest?” — that Mr Khasoggi needed to be eliminated, but it happened anyway. A savvy foreign policy expert might have realized that Mr bin Salman took things, took criticism, personally.

Of course, when I look at the silliness, right before an election in which the Democrats are expected to lose control of the House of Representatives, in which the Biden Administration has engaged, I don’t see a lot of savviness evident.

Perhaps those congressmen “fuming that Crown Prince Mohammed bin Salman duped the administration” might start asking themselves: was it Mr bin Salman who duped the Biden Administration, or was that Mr Biden himself?
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Cross-posted on American Free News Network.

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The Democrats are running on everything except what matters

The House of Representatives silly “January 6th Committee” held it’s last pre-election meeting, another meeting broadcast on television, as the credentialed media have teamed up with the Democrats to try to maintain their slender majorities in the 2022 elections. The trouble is that the Democrats have no current issues that are important to the voters. The Capitol kerfuffle, a three-hour demonstration of unarmed people, caused a few million dollars in damages — something far, far less serious than the #BlackLivesMatter riots of the previous summer and fall — and they were then over.

The real current issues are the economy and inflation, but the Democrats don’t want to talk, at least not truthfully, about that!

Democrats’ failure to make 2022 about the threat to democracy

Analysis by Aaron Blake | Tuesday, October 18, 2022 | 11:29 AM EDT

Utah voters who tuned into Monday night’s Senate debate were treated to something relatively rare in the 2022 election: a candidate putting Jan. 6, 2021, front and center in his closing argument. Independent Evan McMullin seized upon texts Sen. Mike Lee (R-Utah) sent to the White House indicating a willingness to help President Donald Trump contest the 2020 election results, saying Lee “betrayed your oath to the Constitution.”

Despite the well-publicized Jan. 6 hearings, including the likely final one, held last week, the insurrection has not been an overarching focus of Democrats’ 2022 campaign messaging. Politico reported last week that Jan. 6 has featured in less than 2 percent of ads run for House Democrats.

Maybe, just maybe, the actual Democratic candidates, as opposed to ‘pundits’ like Amanda Marcotte or formerly Republican #NeverTrumpers like Bill Kristol and Jennifer Rubin who have former President Trump living rent-free in their skulls, need to do something really, really radical like win votes, and they are a bit more in tune with what concerns voters most.

Even President Biden’s handlers minions recognize that truth, not that there’s anything they can do other than lie about it. Yeah, most families are focused on putting food on the table and keeping a roof over their heads, but the ability of the working class to do just that has suffered under President Biden. Most Americans are not better off today than they were in 2019.

This lacuna in their messaging comes even as most House Republicans supported Trump’s baseless last-ditch election challenges that led to the attack on the Capitol, and even as a majority of the GOP’s most prominent candidates have either denied or questioned the 2020 election results.

Indeed, a new poll reinforces that Democrats haven’t really driven the argument home. Many Americans view Trump as a major threat to democracy. But the Republican Party more broadly? Not so much.

Of course, many Americans view that Democrats as a far greater threat, as the far-left wing has pushed ‘transgenderism’ in the schools, in ways that a lot of parents see as personally threatening to their children, which is why Glenn Youngkin rather than Terry McAuliffe is now Governor of Virginia, and Republicans control the state House of Delegates as well. Mr Kristol’s The Bulwark has gone all out pro-transgenderism, to show you just how far the #NeverTrump former Republicans have gone. The Republican neo-conservatism of the Bush years has moved wholly toward the Democratic Party, including their foreign interventionism when it comes to the war between Russia and Ukraine.

A New York Times/Siena College poll shows that 45 percent of Americans regard Trump as a “major” threat to democracy, while just 28 percent say the same of the GOP.

That 28 percent figure is actually smaller than the percentage who view the Democratic Party as a threat to democracy (33 percent) — despite there being no comparable example of Democrats trying to overturn an election. (And no, Stacey Abrams and Hillary Clinton aren’t analogous.)

Actually, yes, they are. When you consider the definition of analogous, “similar in a way that invites comparison : showing an analogy or a likeness that permits one to draw an analogy,” it’s not difficult to see how those two ladies’ reactions to their electoral defeats were attempts to undermine the legitimacy of the victors.

Some of this is partisanship — along with Republicans’ successful attempts to play up the issue of voter fraud, despite the utter lack of evidence that it’s a major problem in American elections. Polls have long shown Republicans and Democrats view the other side as a threat to democracy, but for very different reasons.

But if you dig a little deeper, you’ll see that isn’t the full story: It’s also the case that many Democratic voters haven’t been convinced that the problem goes beyond Trump.

The poll shows that 71 percent of Trump 2020 voters regard Democrats as a major threat to democracy. But just 52 percent of Biden voters say the same about the GOP.

Also see: Robert Stacy McCain: Denial is not a strategy

Despite his rent-free residency in the brains of the far left, Donald Trump simply isn’t immortal; he’s 76 years old, and will be 78 by the time the 2024 elections come around. He’s significantly overweight, and, despite his wealth, eats garbage. Even if he were elected in 2024, he’d be constitutionally limited to just four years in office. But the policies of today’s Democratic Party, mandating plug-in electric vehicles that most Americans cannot afford, pushing drastic social changes that many Americans dislike, and ignoring increasing violent crime rates, would last a lot longer than that.

After several paragraphs, some of which reveal the author’s clear bias in favor of the Democrats, we come to his conclusion:

But the integrity of the democratic process is something Democrats and the Jan. 6 committee have pitched as being of the utmost importance — going to the core of who we are as a country. Yet at this point, with just half of Biden voters and one-quarter of independents saying the GOP is a major threat to democracy, it’s clearly not something they’ve convinced voters is truly at stake in 2022.

Why do I, personally, believe that the Democrats are the far greater threat? Their responses, primarily by Democratic Governors, to COVID-19 were heavily weighted toward dictatorial control and the blatant abridgement of our constitutional rights. That the government can order churches closed, or restrict our First Amendment right of peaceable assembly, ought to be anathema, but Democratic — and sadly, a few Republican as well — Governors did just that, and thanks to the unreasoning fear instilled by the government, millions and millions of people accepted that as reasonable and legitimate.

At least here in the Bluegrass State, Republican state legislative candidates ran hard against Governor Andy Beshear’s (D-KY) authoritarian dictates, and the voters rewarded the GOP with an additional 14 seats in the state House of Representatives, and two more in the state Senate. I’d like to see that be more important to other voters, but I guess that we’ll see in 20 more days.

Well, who knows? The poll numbers favor the Republicans, but the only poll which really matters will be taken on November 8th, and surprises have been known to happen before.