Tearing Apart NATO, over a Trinket

by Jim Geraghty, National Review, Mourning Jolt, Jan. 20, 2026- On the menu today: In a saner and better world, we would be having a serious discussion of the 25th Amendment of the Constitution right now.

Trump’s Unhinged Greenland Threat

President Trump, to Norwegian Prime Minister Jonas Gahr Støre:

Dear Jonas: Considering your Country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace, although it will always be predominant, but can now think about what is good and proper for the United States of America. Denmark cannot protect that land from Russia or China, and why do they have a “right of ownership” anyway? There are no written documents, it’s only that a boat landed there hundreds of years ago, but we had boats landing there, also. I have done more for NATO than any other person since its founding, and now, NATO should do something for the United States. The World is not secure unless we have Complete and Total Control of Greenland. Thank you! President DJT

The Norwegian prime minister posted:

I can confirm that this is a text message that I received yesterday afternoon from President Trump. It came in response to a short text message from me to President Trump sent earlier on the same day, on behalf of myself and the President of Finland Alexander Stubb.

Oh, where to begin? The president’s diatribe is unhinged, false, or bonkers in at least ten ways.

One: The Norwegian government does not award the Nobel Peace Prize; the Nobel committee does; its members are appointed by the Norwegian parliament; current members of the Norwegian government or parliament are barred from serving on the committee.

Two: The nomination deadline for the 2025 Nobel Peace Prize was January 31, 2025. Even if you think Trump’s accomplishments in his first year warrant him receiving a Nobel Peace Prize, he had only been in office for eleven days when the nomination deadline passed. (Yes, Barack Obama was named the winner in 2009, in a move that was widely seen as an embarrassment for everyone involved. Then-White House chief of staff Rahm Emanuel chewed out the Norwegian ambassador over it.)

Three: Trump has not “stopped 8 wars plus.” Let’s give him credit for Israel and Hamas, and Israel and Iran. Everything else is an exaggeration, either about the intensity of the conflict or the U.S. role in ameliorating it. Trump’s persistent boast that he ended the shooting war between India and Pakistan is a serious, and entirely unnecessary, irritant to the Indian government.

Four: When Trump writes, “Denmark cannot protect that land from Russia or China,” that country won’t have to protect Greenland alone, so long as Denmark is a member of NATO. If Russia or China were to attack Greenland, the United States would be treaty-bound to help defend it and repel the invaders.

Five: Despite what the president claims, there are indeed written documents affirming Danish sovereignty over Greenland.

In 1916, the U.S. government formally recognized Greenland as Danish territory, stating, “The undersigned Secretary of State of the United States of America, duly authorized by his Government, has the honor to declare that the Government of the United States of America will not object to the Danish Government extending their political and economic interests to the whole of Greenland.”

A 1951 pact between the countries on the mutual defense of Greenland stated, “The Government of the United States of America and the Government of the Kingdom of Denmark, in order to promote stability and well-being in the North Atlantic Treaty area by uniting their efforts for collective defense and for the preservation of peace and security and for the development of their collective capacity to resist armed attack, will each take such measures as are necessary or appropriate to carry out expeditiously their respective and joint responsibilities in Greenland.”

In 1954, the United Nations recognized and declared, “Greenland freely decided on its integration within the Kingdom of Denmark on an equal constitutional and administrative basis with the other parts of Denmark.”

The Danes have been on Greenland since 1721.

Six: When Trump says, “we had boats landing there, also” . . . who is the “we” in that sentence? Trump’s ancestors in Germany and Scotland?

Keep in mind, the United States didn’t declare its independence, and thus its existence as a sovereign state, until 55 years after Danes arrived in Greenland.

Seven: Trump can claim he’s “done more for NATO than any other person since its founding,” but former Secretary of State Dean Acheson; West German Chancellor Konrad Adenauer; former British Prime Minister Margaret Thatcher; and former U.S. Presidents Harry Truman, Dwight Eisenhower and Ronald Reagan could not be reached for comment. Heck, you could argue Bill Clinton did more to shape NATO, with the invitations to Poland, Hungary, and the Czech Republic to join the alliance.

Not only has Trump not done more for NATO than anyone else in history, but he’s also currently the most likely threat to its continued unity.

Eight: Trump demands, “NATO should do something for the United States.”

The only time NATO has invoked Article Five in its 75-year history was after the 9/11 attacks in 2001, when all 18 members (at that time) pledged to support the U.S. response to al-Qaeda and that Taliban. At the new NATO headquarters in Brussels, Belgium, a memorial composed of a piece of mangled steel from the 107th floor of the World Trade Center’s North Tower sits atop a pedestal.

In the long occupation of Afghanistan, the United Kingdom lost 457 service members; Canada lost 159; France lost 90; Germany lost 62; Italy lost 53; Poland lost 44; Denmark lost 43; Spain lost 35; Romania lost 27; the Netherlands lost 25; Turkey lost 15; the Czech Republic lost 14; Norway lost ten; Estonia lost nine; Hungary lost seven; Sweden lost five; Latvia lost four; Slovakia lost three; Finland and Portugal lost two each; and Belgium, Bulgaria, Croatia, Lithuania, and Montenegro lost one each.

In the war in Iraq, the United Kingdom lost 179 service members, Italy lost 33, Poland lost 30, Bulgaria lost 13, Spain lost 11, Denmark lost seven, Slovakia lost four, Latvia lost three, Estonia and the Netherlands lost two each, and the Czech Republic and Hungary each lost one.

(By the way, the U.S. ally that suffered the fourth-most casualties in Iraq? Ukraine. But hey, just because those guys stood with us when we asked for help doesn’t mean we have to help them out, right?)

There are many depressing facets of the president’s tirade, but one of the biggest is that these casualties, and the efforts of our longtime allies over seven and a half decades, probably never crossed the president’s mind.

Nine: Trump contends, “The World is not secure unless we have Complete and Total Control of Greenland.”

As many have observed, up until Trump took office, the U.S. and Denmark largely agreed on their roles protecting the island. I hate to disrupt a good controversy with facts, but the U.S. already plays a significant role in the national defense and economy of Greenland. The island is the location of the Pentagon’s northernmost installation, Pituffik Space Base (pronounced “bee-doo-FEEK”), formerly known as Thule Air Base.

Ten: Trump sounds like an angry toddler throwing a tantrum; in his recent interview with the New York Times, Trump emphasized that his priority is to own Greenland because of his feelings, and ownership is “what I feel is psychologically needed for success”:

David E. Sanger: In Greenland, we had START. In the 1951 agreement, though, it says the United States can reopen these bases anytime you want. You can send as many troops as you want.

President Trump: That’s right.

Sanger: And you haven’t done it. How come?

Trump: Because I want to do it properly.

Sanger: And properly means own it?

Trump: Really it is, to me, it’s ownership. Ownership is very important.

Sanger: Why is ownership important here?

Trump: Because that’s what I feel is psychologically needed for success. I think that ownership gives you a thing that you can’t do, whether you’re talking about a lease or a treaty. Ownership gives you things and elements that you can’t get from just signing a document, that you can have a base.

Katie Rogers: Psychologically important to you or to the United States?

Trump: Psychologically important for me. Now, maybe another president would feel differently, but so far I’ve been right about everything.

Remember, if you object to a 79-year-old American president threatening war against a longtime NATO ally, and explicitly saying it was because he wasn’t given a Nobel Peace Prize, there are Americans who will insist that your objection is a sign of “Trump Derangement Syndrome.”

There is indeed derangement going on around here, but not from the sources these folks claim.

Trump may well order some sort of military operation to seize Greenland, he may not. But ask yourself, what sorts of outcomes are likely when the president has so little control over his temper and emotional incontinence that he explicitly states that he wants “Complete and Total Control of Greenland” because he didn’t get the Nobel Peace Prize, in a text to foreign leaders?

I am again reminded of a line of dialogue from The Dark Knight: “What exactly did you think they were gonna do?”

How exactly do you expect good outcomes to be generated by a president who is so erratic, unhinged, ill-informed, and irrational?

In a saner, better world, Trump cabinet officials would be turning to each other and discussing invoking the 25th Amendment, which states:

Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.

Oh, no one in the current cabinet would ever dare utter the thought. They’re all Trump loyalists, and if they can distinguish the best interests of the country from their own personal ambitions and access to power, they’re hiding that ability well.

No one seriously discussed invoking the 25th Amendment with former President Joe Biden, either, even though he couldn’t remember the names of longtime aides; Tony Blinken had to remind the president why he was meeting with a foreign leader; Biden didn’t recognize DNC chairman Jaime Harrison in meetings; Virginia Senator Mark Warner ended a phone call with Biden concluding that the president had no idea what was going on in his own counterterrorism policy; a cabinet secretary described Biden as “disoriented” and “out of it,” mouth agape in a 2023 meeting; and Biden forgot the name of Defense Secretary Lloyd Austin and referred to him as “the black man” in an interview with BET.

After one president who went senile in office and another who is nuttier than a Payday candy bar, we can only conclude that the 25th Amendment of the Constitution is just there for decoration.

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Why Credit Card Interest Caps Will Backfire—Again

by Jack Salmon, The Unseen and The Unsaid!, Jan. 17, 2026 - President Trump’s recent proposal to impose a 10% cap on credit card interest rates is being marketed as a straightforward way to help households struggling with high borrowing costs. The political appeal is obvious. Credit card APRs are salient, unpopular and easy to demonize.

But interest rate caps, usury laws by another name, are among the most studied and most consistently disappointing forms of economic regulation. Across countries, the evidence points in the same direction: When governments cap interest rates below market-clearing levels, credit does not become cheaper in any meaningful sense. It becomes scarcer, less transparent and more distorted.

An interest rate is the price of borrowing, and like any price it reflects underlying costs. For credit cards, those costs include funding, servicing, fraud, compliance, capital requirements and default risk. A borrower with a higher probability of default must be charged a higher rate for lending to make sense at all.

The World Bank puts the point bluntly: If interest rate caps are set so low that lenders cannot cover their costs and earn a risk-adjusted return, lending simply becomes uneconomic. The relevant question is not whether banks could earn less on some accounts, but whether entire segments of borrowers can be served at the capped rate.

For a large share of credit card users—especially younger borrowers, lower-income households and those with thinner or riskier credit histories—the answer is no.

How Credit Card Issuers Will Adjust

When interest rate caps bind lenders’ behavior, lenders do not passively accept lower returns. They adjust along multiple margins, many of which are not fully visible to consumers and are hard to regulate.

1. Reduced Access and Tighter Underwriting

The most obvious response to an interest rate cap is credit rationing. Decades of research show that credit supply is highly sensitive to price restrictions. When rates are capped, issuers tighten approval standards, reduce credit limits or stop offering products altogether to riskier borrowers.

This reduction in access is not evenly distributed. It falls disproportionately on borrowers with lower credit scores, unstable income or limited credit histories—the very consumers the policy is meant to help.

2. Higher Fees and Back-End Charges

If only interest rates are capped, issuers can and will shift costs elsewhere. Lenders frequently respond by increasing noninterest fees, including annual fees, late fees, balance transfer fees, foreign transaction fees and penalty charges.

Some of these fees are easier for consumers to avoid than interest; many are not. The overall cost of borrowing does not necessarily fall, but it becomes less transparent and harder to compare across products, particularly for consumers with limited financial literacy.

3. Weaker Rewards and Less Generous Benefits

Credit card rewards—cash back, airline miles, points, purchase protections—are not free. They are financed largely by interest income from revolving balances and interchange revenue.

A binding interest rate cap would put pressure on that revenue stream. Issuers would respond by:

• Reducing cash-back percentages
• Devaluing points and miles
• Raising redemption thresholds
• Eliminating ancillary benefits such as extended warranties or travel insurance

These changes are less politically visible than higher APRs, but they represent a real reduction in consumer surplus, especially for middle-income households who pay off balances intermittently but value rewards.

4. Product Simplification and Fewer Options

Risk-based pricing allows issuers to offer a wide range of products tailored to different borrowers. Rate caps compress that range. Cards designed for subprime or near-prime consumers become unviable, leaving a smaller, more standardized set of products aimed at safer borrowers.

Evidence from Countries That Have Tried This Before

Chile: Credit Caps Lowered Access

In 2013, Chile reduced the maximum legal interest rate on consumer loans from 54% to 36%. A 2019 study by Carlos Madeira in the Journal of Banking & Finance used matched household and bank data to estimate the impact.

The findings are clear:

• Nearly 10% of borrowers were excluded from bank credit
• Credit access fell sharply for borrowers whose risk-adjusted rates were just above the cap
• The negative effects were strongest for younger, less educated and poorer households
• The policy did not lower borrowing costs for these groups. It simply removed them from the market.

Colombia: Higher Caps, More Access

Colombia provides a useful contrast. In 2007, the government raised the interest rate ceiling for microcredit loans while keeping other caps unchanged. Using a difference-in-differences design and the full credit registry, researchers found that higher allowable rates:

• Increased new microcredit lending
• Increased new loans by 4.5% for every percentage-point increase in the cap,
• Expanded total loan portfolios
• Reduced average loan size and maturity, improving borrower-loan matching
• Allowing higher interest rates expanded access to credit, whereas capping them had previously constrained it.

The United Kingdom: Fewer Loans, Worse Selection

When the U.K. introduced a cap on high-cost short-term credit in 2015, acceptance rates at the final stage of loan applications fell sharply, from around 50% to 30% within a year.

The Financial Conduct Authority anticipated a decline of 11% in loan volume and a 21% drop in the number of borrowers. The actual declines resulting from the interest rate cap were 56% and 53% respectively.

Rejected applicants were disproportionately younger, poorer and more likely to be unemployed. The cap reduced lending volume without eliminating demand.

When formal credit becomes less available, demand does not disappear. Borrowers turn to alternatives: informal lenders, employer advances, overdrafts or illegal credit markets. These options are often more expensive, less transparent and less regulated.

Interest rate caps often push borrowers out of the formal financial system and into precisely the kinds of arrangements policymakers claim to oppose.

The Bottom Line

A 10% cap on credit card interest rates would not make credit broadly more affordable. It would reshuffle costs, restrict access, reduce rewards and narrow consumer choice. The headline APR would fall, but many households would be worse off, either excluded from credit entirely or paying more in less visible ways.

As my colleague Veronique de Rugy noted last month:

“The strange new alliance between democratic socialists and nationalist populists isn’t a sign of political healing. It’s a sign that people have lost their grip on basic economics. They’ve decided that markets can be bullied, risk forbidden and prices commanded into submission. But magical thinking still produces real-world shortages when put into practice.”

Usury laws are politically attractive because they focus on prices. But prices in credit markets coordinate risk. When policymakers override the prices, the risk adjustments do not disappear; they show up elsewhere, to the detriment of consumers.

Jack Salmon is a Research Fellow and Gibbs Scholar at the Mercatus Center at George Mason University, where he focuses on economic and fiscal policy, with an emphasis on federal budgets, taxation, economic growth, and institutional analysis.

Rod's Comment: Nothing Donald Trump proposes or does should surprise me anymore, and it doesn't. Donald Trump is an economic illiterate. I am somewhat surprised that more Republicans just accept whatever he proposes. They know better. This is the kind of policy one would expect from Elizabeth Warren or Bernie Sanders. 

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5% of People Detained By ICE Have Violent Convictions, 73% No Convictions

by David J. Bier, Cato Institute, published Nov. 24, 2025 -President Donald Trump premised his mass deportation agenda on the idea that he will be “returning millions and millions of criminal aliens.” Department of Homeland Security (DHS) Secretary Kristi Noem has repeatedly claimed that they are arresting the “worst of the worst.” New nonpublic data from Immigration and Customs Enforcement (ICE) leaked to the Cato Institute reveal a different story.

• Of people booked into ICE custody this fiscal year (since October 1, 2025):
• Nearly three in four (73 percent) had no criminal conviction.
• Nearly half had no criminal conviction nor even any pending criminal charges.
• Only 8 percent had a violent or property criminal conviction.
• Only 5 percent had a violent criminal conviction.
• A majority of criminal convicts had vice, immigration, or traffic convictions.

The appendix table at the end of this report provides the detailed breakdown of the data by detailed type of crime.

The earliest data I obtained that was reported in this way comes from April 26, 2025. Compared with October 2024 to April 2025—before the White House shifted focus completely away from criminals—80 percent of the increase in daily ICE book-ins have come from individuals without criminal convictions.

Since October 1, only 8 percent of detained persons had either a violent or property crime. As many people were detained with an immigration conviction (e.g., illegal entry/​reentry) as violent convicts.

In its posts on this subject, DHS and ICE often include people with pending criminal charges as “criminal arrests,” even though these people have never been found guilty, and the charges are often minor and regularly dismissed. ICE is depriving these people of due process by arresting them prior to a conviction. Nonetheless, ICE data show that nearly half (47 percent) of all ICE detainees this fiscal year

Other data sources support the conclusions from the number of ICE book-ins. The Deportation Data Project, which is run by UC Berkeley Law School in collaboration with the UCLA School of Law’s Center for Immigration Law and Policy, has obtained data on ICE arrests via the Freedom of Information Act. ICE arrests are individuals charged as removable by Immigration and Customs Enforcement, so it excludes people arrested by Border Patrol and referred to ICE for detention who are included in the data above.

This arrest dataset also does not disclose the type of crime committed. In any case, it similarly shows that by late July, 67 percent of ICE arrests were of people without criminal convictions. It also shows that by late July, nearly 40 percent of ICE arrests were of people without criminal convictions or criminal charges. This is a dramatic change from President Joseph Biden’s policies under which only one in 10 arrests were individuals without any criminal conviction or charge.

More important than the share of arrests is the absolute number of these arrests. Already by late July, ICE arrests of immigrants without criminal convictions had increased by 571 percent from the weekly average to start the calendar year. ICE arrests of immigrants without criminal convictions or criminal charges increased a staggering 1,500 percent since January 1.

Finally, the last data source comes from public data directly from the Immigration and Customs Enforcement website, showing that by mid-November, 69 percent of current ICE detainees who were arrested by ICE had no criminal conviction and 40 percent had no criminal charge. The number of people in detention who were convicted of a crime and had no pending charges increased a staggering 2,370 percent since January from fewer than 1,000 to over 21,000.

The ICE data show that the share of immigrants detained after an ICE arrest who had criminal convictions has fallen in half since January from 62 percent of detainees to 31 percent in November. At the same time, the share of detainees without a criminal conviction or criminal charge has exploded from 6 percent to 40 percent of detainees.

The same ICE dataset shows that in November 2025, 70 percent of those who ICE deported had no criminal conviction, and 43 percent had no criminal conviction or criminal charge. Across all available datasets, it is clear that the Trump administration is not living up to its promises to deport millions and millions of criminals or to prioritize the worst of the worse. So far, the administration has removed barely 90,000 individuals with criminal convictions and fewer than 150,000 individuals with convictions or pending charges.

President Trump’s deportation agenda does not match the campaign promises that he made nor the rhetoric from his officials. The president has already recognized that deportations are hurting the US economy in deporting good workers. But perhaps more importantly, the agenda is taking resources away from targeting true public safety threats, whether from immigrants or Americans. ICE should redirect its resources back toward serious public safety threats.

Rod's Comment: I know that for many of Trump's most ardent supporters, this doesn't matter; they are not to be confused with facts. They are simply anti-immigrant and do not even care if legal immigrants are rounded up and deported, nor do they care if first-generation American citizens are deported. For others who believed Trump would deport "the worst of the worst," it should matter that you were lied to, and that is not who Trump is deporting. To see more of the data supporting the text of this article, follow this link. 

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Trump Announces Tariffs on European Countries Opposing Greenland Takeover

 by Rod Williams, Jan. 17, 2026- Every day is another, I-can't-believe-it-day, but now I can believe it.  There are no limits to Trumps disreguard for the constitution, crealty, brazenness, petulant childishness, corruption, narcissistic behavior, economic illiteracy, and stupidity. Every time, I think he can't get worse, he does.

I never thought we would threaten the military annexation of the territory of a member of a NATO country. I never thought a fellow democratic state would ever need to fear an invasion from the United States, but here we are.

Today, Trump stepped up his campaign against our NATO allies. In response to Trump's repeated threats to annex Greenland, the nations of Britain, France, Germany, Norway, Sweden, Finland and the Netherlands have all announced in recent days that they would send small numbers of troops to Greenland for joint exercises with the Danish military. In retaliation, Trump said he would impose 10 percent tariffs on imports of all goods from those countries starting Feb. 1, increasing to 25 percent on June 1. He said it would only be removed after a deal is reached for “the Complete and Total purchase of Greenland.” Read more about it at this link.

For the first time in my life, I am ashamed to be an American. I am a Vietnam veteran and proud of my military service, and I have always honored those who served our nation in the armed forces. Now, if I were advising someone contemplating joining the US miliray, I would advise them not to do it. The US is no longer a force for good in the world, but a bully nation acting on the principle that might makes right. We are now the bad guys. 

If the US gets in a shooting war with the military of Greenland, Britain, France, Germany, Norway, Sweden, and the Netherlands, my sympathy will lie with Greenland, Britain, France, Germany, Norway, Sweden, and the Netherlands. 

I now expect more bad behavior from Trump. I expect things to get worse before they get better. If Trump imposes martial law and suspends the midterms, I am not going to be shocked.  I cannot think of anything Trump might do that would shock me anymore.

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The Fed Is Flawed, Politicization Makes It Worse

Phillip Magness

By Phillip Magness, RealClear Markets, Jan. 17, 2026- On Monday, Federal Reserve Chair Jerome Powell delivered a stark warning. 

Responding to the Justice Department’s subpoena and threat of charges, Powell said the move was a pretext: an attempt to pressure the central bank into setting interest rates according to political demands rather than economic evidence. He framed it as an unprecedented attack on Federal Reserve independence and vowed to continue doing his job “without fear or favor.”

Powell is right about the dangers of politicizing economics. But here’s the uncomfortable truth: the Federal Reserve is far from a pristine institution devoted to “public service,” as Powell claims. 

The Fed’s history is littered with mistakes. In fact, in an ideal world, central banks would not exist at all—or, if they must exist, their mandate would be ruthlessly narrow. Throughout history, central banks have proven vulnerable to political influence. 

Still, given the Fed we actually have, turning it into an arm of the White House would be far worse than preserving its imperfect independence.

If a central bank must exist, its powers should be tightly constrained. A small toolbox limits the ways in which political actors can manipulate monetary policy. Unfortunately, the modern Fed has amassed an expansive arsenal: rate setting, quantitative easing, emergency lending facilities, market backstops, and regulatory authority over vast swaths of the financial system. In recent years, left-leaning figures in the Fed’s governance even tried to steer the central bank into climate change and Diversity, Equity, and Inclusion initiatives. Each additional tool creates another lever that politicians can pull—subtly or overtly—for their own ends.

Yet even with an overly powerful Fed, a degree of institutional independence remains preferable to direct political control. Elected officials face overwhelming incentives to maximize short-term economic performance, especially heading into elections. That typically means pressuring the central bank to juice growth through easy money, to monetize deficits, or both. The long-term costs—inflation, financial instability, and currency debasement—become someone else’s problem.

This is what makes Donald Trump’s use of lawfare against Powell (and previously against Governor Lisa Cook) so alarming. These actions can only be interpreted as attempts to bring the Fed to heel, clearing the way for more direct presidential control over monetary policy. 

Given the Fed’s already-flawed incentive structure, this move risks making policy even more subservient to White House priorities rather than economic realities.

Unfortunately, we already know what those priorities look like. The Trump White House has made no secret of its desire for a sharp, economically imprudent reduction in interest rates—far beyond the cautious, incremental cuts the Fed has begun as it unwinds the aggressive hikes used to combat Biden-era inflation. The goal is clear: a burst of short-term monetary stimulus to “goose” the economy, regardless of the downstream consequences.

The clearest signal comes from Trump’s second-term appointee to the Fed, Steve Miran. At monthly board meetings, Miran has repeatedly pushed for dramatic rate cuts that are wildly out of sync with the rest of the governors, including those who favor modest and gradual easing. His proposals are not evidence-based disagreements, but radical departures from any serious consensus about how to manage inflation risks.

Worse still, Miran’s views are not grounded in sound economics. He has a long public record of advancing fringe theories centered on tariff protectionism and an explicit scheme to devalue the dollar as a backdoor default on U.S. national debt. 

These ideas are not merely unconventional; they are dangerous. Intentionally weakening the dollar and slashing rates to finance deficits risks triggering capital flight, renewed inflation, recession, or something far worse.

If Miran’s positions are a preview of what monetary policy would look like under a politically subservient Fed, then the campaign against Powell is not just a personal or institutional dispute. It is an existential threat to the long-term health of the U.S. economy. 

The Fed may be deeply imperfect, but weaponizing the justice system to bend it to presidential will would make everything worse. Preserving Fed independence is not an endorsement of everything the Fed has done. It is a recognition that when monetary power is vast, politicizing it is the fastest way to ensure it is abused.

Phillip W. Magness is Senior Fellow and David J. Theroux Chair in Political Economy at the Independent Institute. He has appeared as a guest lecturer at Nashville's Harwood Salon. 

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Supreme Court Seems Ready to Let States Ban Men from Women’s Sports

by Rod Williams, January 14, 2025 - I am pleased to see that the Supreme Court Seems Ready to Let States Ban Men from Women’s Sports. 

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Sovereign Credit, Affordability, and the Crisis Ratchet

Michael Dioguardi

by Michael Dioguardi, Mises Institute, published 1/12/2026 -  In modern political debate, rising costs of living are usually blamed on markets. Housing is “unaffordable.” Healthcare is “broken.” Education is “too expensive.” The proposed remedy is almost always the same: more public spending, more intervention, more emergency programs funded by government credit.

But what if the affordability crisis is not a failure of markets at all? What if it is the predictable outcome of how modern governments finance themselves?

From an Austrian perspective, the affordability crisis is best understood as a monetary and institutional phenomenon. Since the early 1970s, governments like the United States have operated under a system of discretionary sovereign credit, where spending is no longer meaningfully constrained by taxation or savings. This system does not distribute new money evenly. It enters the economy through specific channels, benefiting some groups long before others ever see it. This is not a moral accusation, it is a structural description.

How Sovereign Credit Actually Enters the Economy

When governments spend money they do not raise through taxes, they rely on borrowing that is ultimately absorbed or supported by central banks. Since the end of the Bretton Woods system in 1971, this process has had no hard external constraint. The Federal Reserve can expand its balance sheet as needed, while Treasury debt is rolled over indefinitely.

New money does not arrive in workers’ paychecks first. It arrives through financial institutions, government contractors, asset markets, and politically-favored sectors. Austrians have long described this process through what is known as the Cantillon effect: early recipients of new money benefit, while later recipients face higher prices without corresponding income gains.

Housing offers the clearest example. Credit expansion lowers interest rates and increases borrowing capacity, bidding up home prices. Existing owners and leveraged investors benefit. Renters and first-time buyers face higher costs without higher wages. The problem is not a shortage of housing “supply” in the abstract. It is that monetary policy capitalizes future income streams into present asset prices.

This same pattern appears in equities, land, education credentials, and healthcare systems tied to public reimbursement. What is often called “market failure” is frequently the monetary system doing exactly what it is designed to do.

Crisis as the Justification Mechanism

If sovereign credit produces distortions, why does the system persist? The answer lies in the crisis. Every major expansion of discretionary finance is justified as a response to emergency: recessions, financial panics, wars, pandemics. Each intervention is presented as temporary and necessary. Yet the institutional authority created during crises is rarely rolled back afterward.

Economist Robert Higgs described this dynamic as the “ratchet effect.” Government expands during emergencies, then partially retreat, leaving behind a permanently larger state. Monetary institutions behave the same way. Central banks acquire new tools, new mandates, and new precedents with each crisis.

The 2008 financial crisis normalized large-scale asset purchases and bank rescues. The 2020 pandemic response went further, combining direct transfers, emergency lending facilities, and massive balance sheet expansion. These actions stabilized incomes and markets in the short run, but they also established new baselines for what governments and central banks are expected to do in future downturns.

From an Austrian viewpoint, the danger is not that crises are “exploited” in bad faith. It is that intervention creates conditions that make future crises more likely, while also providing the justification for even greater intervention.

Why Affordability Keeps Getting Worse

This crisis-driven system has a cumulative effect on prices. Asset inflation precedes consumer inflation. Those closest to credit creation benefit first. Those dependent on wages face rising costs later. Over time, the gap widens between nominal economic growth and real economic access.

This explains why affordability deteriorates even during periods of apparent prosperity: GDP rises, stock markets climb, government spending expands, yet housing, childcare, healthcare, and education drift further out of reach for ordinary households. Austrians argue that this is not a coincidence. It is the inevitable result of suppressing interest rates, distorting capital allocation, and financing public commitments through credit rather than real savings.

Public choice economics reinforces this view. Politicians face strong incentives to promise benefits now while deferring costs into the future. Sovereign credit makes this politically viable. The true costs appear later, dispersed across the population through higher prices and reduced purchasing power.

The Illusion of Democratic Control

One of the most troubling aspects of the modern credit system is its opacity. Governments routinely claim they are financially constrained, while acting as if they are not. Officials deny that money creation drives inequality or inflation, even as balance sheets expand dramatically. This partial denial is not accidental. Open acknowledgment that spending is limited primarily by political choice rather than revenue would invite immediate demand escalation.

In this sense, opacity plays a stabilizing role. But stability achieved through obscurity comes at a cost. Citizens experience rising prices without understanding the mechanisms behind them. Frustration grows, political movements radicalize, and demands intensify for even more intervention, reinforcing the cycle.

From an Austrian perspective, this is a deeply fragile equilibrium. It depends on public misunderstanding, technocratic discretion, and crisis normalization. It cannot be openly democratized without risking inflationary breakdown, yet it increasingly undermines trust in institutions.

Why the Austrian Critique Still Matters

Critics often dismiss Austrian economics as impractical or overly rigid. Yet Austrians have been remarkably prescient about the long-term consequences of discretionary money: asset bubbles, rising inequality, affordability crises, and recurring instability.

This does not mean Austrians believe crises will inevitably produce collapse. Retrenchment is possible. But history suggests it is politically rare and costly. Once discretionary credit becomes the primary funding mechanism of government, reversing it requires confronting powerful interests and popular expectations.

The “affordability crisis” is not a mystery. It is not primarily about greed, shortages, or market failure. It is the predictable result of a monetary system that creates winners and losers through the timing and channels of money creation. Until that reality is confronted, calls for affordability reform will continue to treat symptoms while intensifying the underlying disease.

Michael Dioguardi is a residential property manager and independent blogger writing under the title Seeker of Liberty. Drawing on years of dedicated study of the U.S. Constitution, the Federalist and Anti-Federalist Papers, landmark court decisions, and Austrian School economics, he analyzes contemporary challenges to individual liberty, institutional accountability, and economic stability. Michael resides in Nashville. 

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Harwood Salon Luncheon: A Half Century of the Bank Secrecy Act

 

From Harwood Salon:

Join us in Nashville for a luncheon with Jarett Decker, Joey Jacobs Chair of Excellence in Accounting and Professor of Practice at MTSU. 

Since the passage of the first anti-money laundering law in 1970, the Bank Secrecy Act, the United States has steadily expanded financial surveillance. Banks and an ever-growing range of private industries now face severe penalties if they fail to monitor and report customer activity to law enforcement. In 1989, the United States and its G7 partners exported this model globally, creating a system that today reaches more than 200 countries and jurisdictions.

Despite its enormous scope, the global anti–money laundering regime remains strikingly ineffective. Credible estimates suggest it intercepts less than one percent of illicit financial flows. What it does far more effectively is erode financial privacy, increase costs on ordinary people, and strengthen surveillance tools that can be readily adopted by authoritarian governments abroad.

In this conversation, Jarett Decker, Jacobs Chair of Excellence in Accounting and Professor of Practice at Middle Tennessee State University, will examine how anti-money laundering regulations operate in practice and why their real-world effects often diverge from their stated goals. Drawing on his background in U.S. and global financial regulation and criminal law, Decker will explore how these regulatory structures impact individual freedom, economic opportunity, and the rule of law. He will also discuss recent developments suggesting the possibility for change.

This discussion supports AIER’s mission by highlighting how financial surveillance affects everyday life and economic vitality. Understanding the unintended consequences of expansive regulation helps clarify where reforms are needed to protect privacy, promote a more open economy, and preserve the conditions that allow individuals and businesses to flourish.

Harwood Salons – Nashville is made possible through the generosity of supporters like you. We encourage you to become a member or make a donation to support the American Institute for Economic Research and ensure the continuation of these important events. All donations are tax-deductible and directly contribute to sustaining Harwood Salons – Nashville.

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• Sustaining Members: $100/yr
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Agenda 

• 11:30 AM – 11:40 AM – Arrivals and Seating
• 11:45 AM – 12:00 PM – Meal service begins
• 12:00 PM – 1:00 PM – Presentation & Q&A
• 1:00 PM – 1:30 PM – Departures

About the Speaker

Jarett Decker (Jerry) is the Joey Jacobs Chair of Excellence in Accounting and Professor of Practice at Middle Tennessee State University.  A lawyer and CPA, he is the former Head of the World Bank’s Centre for Financial Reporting Reform in Vienna, Austria, where he advised governments in developing and former communist countries on financial regulation, mostly in Eastern Europe and Southeast Asia. Before the World Bank, Decker was the first person to serve as Chief Trial Counsel for the Public Company Accounting Oversight Board –the accounting watchdog created in response to Enron–where he established the program of disciplinary litigation against Big Four and other auditors.  He has also served as Senior Trial Counsel for the U.S. Securities and Exchange Commission. He is currently developing a program in international anti-money laundering for the Master of Accounting program at MTSU and taught the first course last fall.  He has published articles in Reason magazine, the New York Times, The National Interest, and the American Institute for Economic Research’s website.  Decker began his career as a criminal trial lawyer defending the constitutional rights of the accused, including in money laundering cases.

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George Conway is the Kind of Person we Need in the U.S. Congress to Stop Donald Trump

by Rod Williams, Jan. 10, 2026- I just made a contribution to a Democrat running for Congress.

Kamala Harris was the first Democrat I ever made a campaign contribution to in my life, and it was not because I liked Kamala Harris or supported her policies; it was because Donald Trump had attempted a coup to overturn the results of an election, and I feared what he might do if he regained the White House. My fear of what Donald Trump might do has been borne out, and he is not finished yet. He is tampling the Constitution and destroying the world liberal rules-based order and replacing it with a Lord of the Flies disorder in which the only rule is that might makes right. 

I didn't make a large contribution to the Harris campaign; I think it might have only been fifty dollars, or maybe a hundred. It wasn't a lot, but I felt I needed to do something to try to help stop Donald Trump from regaining the White House. Since then, I have made a $100 contribution to a Democratic PAC called Win the Center. This is a Democratic group trying to pull the Party away from the extreme left and back toward the center. I think this is important. I think sensible Democrats can win the midterm; I don't think far-left woke socialists can do so. If the Democratic Party becomes the party of Democratic Socialists, Bernie Sanders, AOC, and Aftyn Behn it will not get my vote. I am a conservative, but to stop the far right from destroying our democracy, I will hold my nose and vote for a center-left candidate; I will not vote for a far-left candidate. 

The only campaign contributions I ever made to Democrats were to the Harris candidacy and the PAC listed above. Today I made a contribution to another Democratic candidate.  I just sent a $100 contribution to George Conway, who has announced his candidacy for New York's 12th Congressional District.  I won't be sending money to every Democrat running everywhere, but I feel George Conway would be a much-needed voice in Congress. 

In my view, the Democratic response to Trump has been weak and lackluster. Dems are just too timid and everything they say seems to be poll-tested and consultant-driven. Conway speaks with passion, the kind of passion I think the threat to our democracy and the threat to the world rules-based order deserves. Also, I am impressed with George Conway's analysis and thoughtfulness. Trump has shown there are weaknesses in the structure of our democracy, and George Conway has ideas as to what reforms are needed to protect us from a future Donald Trump. 

I sent $100 to Conway's campaign. If his campaign gains traction, I will contribute more later. To learn more about George Conway or to contribute to his campaign, follow this link. 

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