Saturday, January 07, 2023

The “conservative hardliners” opposed McCarthy and the "moderates" or “the establishment” supported him. Really?

by Jonah Goldberg, The Dispatch, Jan 6, 2023- ... the idea that there’s a coherent and consistent intellectual and ideological motivation to the 20 or so Republican “rebels” is nonsense. There are members of the House Freedom Caucus supporting McCarthy and there are members who aren’t. Chip Roy’s stated reasons for opposing McCarthy are simply different from Matt Gaetz’s or Lauren Boebert’s. There are very serious conservative people on both sides of the fight. There are very unserious conservative people on both sides of the fight. There are performative MAGA poltroons in both camps. But, partly because of the dearth of adequate vocabulary, the rebels get called “hard right” or “conservative hardliners,” and the McCarthy supporters get called moderates or defenders of “the establishment.”

... It's all nonsense. ...  The idea that there is a powerful, moderate, establishment keeping the real conservatives down is false. (link)

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Modern Monetary Theory needs to be buried for good. When the Fed buys bonds, it is printing money. That is a problem.

by Dave Sukoff, Foundation for Economic Education, Tuesday, January 3, 2023 -In the late 1960s Milton Friedman clarified his famous quip by stating that “In one sense, we are all Keynesians now; in another, nobody is any longer a Keynesian.”

In the first part, we are all Keynesians because the government’s out of control spending has forced us to be. In the latter sense, we are not Keynesians because that spending has decimated our financial well-being. Modern Monetary Theory (MMT) is essentially an offshoot of Keynesianism in that government can spend ad nauseam and commensurately print money without any ill effect. With the historic inflation we are now experiencing, MMT has been thoroughly repudiated. MMT is dead–it must now be buried.

In his basic economic textbooks, Professor Paul Krugman preaches Keynesianism. He teaches students about a government spending multiplier. In his fairy tale, the government spends a dollar and the economy grows by more than a dollar. The student’s first question should be: Where does that dollar of spending come from? The student’s next question should be: If this mystical multiplier were in fact real, then why not spend and spend and spend? The answers are straightforward and form the basis of the repudiation of MMT. A dollar of government spending must come from a dollar of taxation, at some point. On the second, the federal Government believed in both Krugman’s myth as well as MMT, and spent as much as they possibly could. Eventually, the inevitable ending came, and it was not a fairy tale.

If there were no discernible consequence to government spending, then the incentive for any government would be to spray money in every direction. Keynesianism, Krugman’s multiplier, and MMT all attempted to provide cover, and enable government to spend. It is simply impossible, and not in dispute, that at some point, that dollar of spending must come from a dollar of taxation. If there is a budget deficit, the government borrows dollars to make up the shortfall. The government mostly borrows dollars by issuing government bonds. To sustain its insatiable desire to spend money, and to not raise current taxes to unappealing levels, the government issues substantial debt.

In recent years, the debt to GDP ratio has crossed the 100 percent level and is now at a historic high. This creates numerous problems, not least of which is rising interest rates. If the government adds to the supply of bonds, the price should go down, and the yield (interest return) would go up. With that gargantuan debt, rising yields would force the government to spend even more on interest payments, resulting in all kinds of other negative effects on the overall economy.

Enter the magic of Quantitative Easing (QE) and MMT. The Government wants to spend, but not raise taxes too much. It then must issue debt, but not cause interest rates to rise. Well, the Federal Reserve can just step in and buy bonds! Sounds perfect – certainly to government officials who want to spend, and claim they are stimulating the economy. Even better, there is no real limit to how many dollars-worth of bonds the Fed can buy. Trillions upon trillions are possible. The Fed balance sheet rose by approximately $8 trillion over the past 20 years, with more than $4 trillion of that in the last two years alone. There is a crucial problem, and this is where MMT is used to obfuscate: When the Fed buys bonds, it is printing money.

It is a rather straightforward printing press. The Federal Reserve purchases a bond from a seller. The seller delivers the bond to the Fed, and the Fed hits a button to deposit money into the seller’s account. That money is created with a keystroke. The sound of this printing press is Enter-Enter-Enter, click-click-click. And just like that, in the last two years, the Fed “printed” $4 trillion new dollars. The Fed is also by far the largest holder of United States Treasury bonds – with a current balance sheet of more than $8 trillion. But MMT said this is not a problem, and for years and years it seemed to be correct as the Fed was growing its balance sheet with no discernible sign of inflation.

But there was inflation. It simply manifested itself in other places besides consumer prices. Inflation is a monetary phenomenon. It is basic math. If new dollars are added to the total supply of dollars, then the price of everything a dollar can be exchanged for must go up. That is just a mathematical fact – not an economic theory like a multiplier, or printing and spending ad nauseam. Dollars are added, prices in dollars go up. While the Fed was performing QE by adding to its balance sheet and printing dollars, the price of financial assets was shooting to the moon. We witnessed one of the greatest transfers of wealth imaginable to holders of financial assets, from the public at large. Ironically, many who promoted Keynesianism and MMT are the same who grouse the loudest about the wealth inequality that their policies directly caused. Bubbles are inflated with dollars. And since the implementation of QE was the cornerstone of Fed policy, that bubble was not in danger of bursting, because the Fed would simply buy more bonds, and print more money. MMT said it was okay.

Like water, though, money eventually finds its way and breaks the dam. With stocks and crypto and real estate headed to the moon, it was only a matter of time before all that money found its way to consumer goods. Inflation, as we commonly understand it, had arrived. It was mathematically pre-ordained, and yet still somehow unexpected. Historically high. We’re talking 1970s high. Family budget-busting high. Economic growth-crushing high. And all because of the failure to loudly ask and understand those two very basic questions: Where does the money come from, and if the theory actually worked, shouldn’t the government just spend infinite money?

Perhaps those in government simply did not want to ask or understand those questions. It was fun, for some, while it lasted. But it’s over now. Those questions need to be asked, over and over again. Because the answers are obvious, and clear, and indisputable. Sadly, so is the painful solution to our current inflation crisis. The government needs to dramatically reduce spending, and the Fed needs to unwind its balance sheet.

Weaning the government and the Fed off spending and printing will be a lengthy and agonizing process. And entirely necessary. Nobody should be a Keynesian anymore. Certainly not if the goal is to reduce inflation and have a growing, robust, and free economy.

Keynesianism, Krugman’s multiplier, and MMT have all been empirically, logically, mathematically, and thoroughly repudiated.

Dave Sukoff is an advisor to the investment management community and previously co-founded and ran a $500mm fixed income relative value fund. He is also the co-founder of a software company and inventor on multiple patents. Dave graduated from MIT, where he majored in finance and economics. This article was originally published on Read the original article.

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Tennessee Rep. Andy Ogles flips vote, supports McCarthy for House Speaker

NASHVILLE, Tenn. (WZTV) January 6th 2023— After previously voting for Byron Donalds and Jim Jordan for Speaker of the House, Tennessee Congressman-elect Andy Ogles showed his support for Kevin McCarthy on Friday in the 12th and 13th round of voting (link)

by ELI MOTYCKA,  JAN 6, 2023- ... Not since 1859 has the house taken more than 13 votes to choose a speaker.

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Friday, January 06, 2023

'Significant' court victory for transparency advocates in Tennessee public records case

 Lawsuit win was over 'deliberative process' privilege used by state officials to deny requests

By Jon Styf, The Center Square, Jan 5, 2023 - The Tennessee Coalition for Open Government is calling a public records victory for the Nashville Post "significant" after the news outlet succeeded in its lawsuit to force Gov. Bill Lee’s office to release a report on how his administration responded to the COVID-19 pandemic.

Davidson County Chancellor Pat Moskal ruled this week in favor of the Nashville outlet after Lee’s office had denied a records request to Scene for the $3.8-million report from McKinsey & Co. The governor's office claimed "deliberative process" privilege in which a public entity claims that a record is being used in deliberations and thus cannot be released to the public.

The Tennessean reported on Thursday that Lee’s office has shown an increased use of the claim, with 61 public records denials citing "deliberative process," which is not an exemption in the Tennessee Public Records Act but instead is derived from a ruling related to discovery in a court case regarding communications between high-ranking government officials "developing and implementing law and public policy."

"I think it was significant because you had a judge that sort of put the brakes on the state’s really broad interpretation of the deliberative-process privilege," said Tennessee Coalition for Open Government Executive Director Deborah Fisher.

Lee’s office isn’t the only one that has claimed "deliberative process" while rejecting a records request. The Metro Nashville Mayor’s Office used the same reasoning for denying the release of internal communications related to negotiations on a $2.1 billion Tennessee Titans stadium.

In the Nashville Post case involving Editor Stephen Elliott, Tennessee Deputy Attorney General Janet Kleinfelter argued that releasing the documents would chill government officials from making decisions in the future and the "privilege is rooted in the 'obvious realization that officials will not communicate candidly among themselves if each remark is a potential item of discovery and front page news.'"

Fisher said that she sat in on arguments in the case and Kleinfelter also claimed that the government needed to keep the report private to prevent "Monday Morning quarterbacking" of the governor’s decisions.

In response to a comment about questioning government being a fundamental right, Nashville constitutional Attorney Daniel Horwitz indicated that the challenge was common from the Tennessee Attorney General’s office.

"I apologize for laughing, but I just choked on my coffee reading this," Horwitz wrote. "Arguing against fundamental rights is very close to the only thing that @AGTennessee’s "Public Interest Division" does."

Horwitz noted that it was great the Tennessean reported on the 61 denials, calling deliberative process a "comically bad faith" application of law. But he said that what really would matter is if the news organization sued each time deliberative process was used to prevent a public records release instead of "taking it on the chin.

Rod's Comment: I am pleased to see this ruling. It should be extremely rare that the actions of government are kept secret from the public. One thing Democrats and Republicans have in common is that when they get in office, they develop a desire to operate in secret. Light is a good disinfectant. 

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Wednesday, January 04, 2023

Copy of the letter signed by Congressman Andy Ogles and 8 other congressmen on Jan. 1 opposing Kevin McCarthy for Speaker.

by Rod Williams, Jan. 4,2023- Below is a copy of the letter signed by Tennessee's 5th Congressional District Congressman Andy Ogles and eight other congressmen on January 1, stating their concerns with Keven McCarthy serving as Speaker of the House.  The nine signatories to this letter have voted against McCarthy on four ballots so far and have been joined by ten other House Republicans.

From the letter, there are two primary concerns the anti-McCarthy congressmen have. One, they want a rule change to make it easier to remove the speaker; and two, they are upset that McCarthy worked to defeat "conservative" congressmen in the primary. The highlighting in the copy below is mine.

Many Republicans have highjacked the word "conservative," to mean someone who is a Trump loyalist and anyone who is not a Trump loyalist is considered insufficiently "conservative." Since the word has lost its normal meaning, one does not really know what someone means when they say that McCarthy worked to defeat "conservatives."  

The nineteen congressmen who have voted against McCarty do not have an alternative candidate they are rallying behind. Some of the candidates they have supported for Speaker have in fact said they support McCarthy for Speaker. This looks bad for Republicans. Republicans only have a slim majority in the House and are going to start this session weakened and divided. 

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Tuesday, January 03, 2023

Congressman Andy Ogles votes against Kevin McCarthy for speaker.

Congressman Andy Ogles
by Rod Williams, Jan. 3, 2022- Fifth Congressional Congressman Andy Ogles was one of 19 House Republicans who voted against Kevin McCarthy for Speaker on the first ballot today. This is the first time a Speaker has not been elected on the first ballot in over a hundred years. All of Tennessee's other Republican congressmen voted for McCarthy. For a full list of those voting against McCarthy follow this link.

The Republican challenger to McCarthy is Rep. Andy Biggs or Arizona.  Briggs is a Trumpinista who helped organize the Jan. 6, 2021, “Stop the Steal” rally that preceded the attack on the U.S. Capitol. Arizona House Speaker Rusty Bowers (R) has testified at the Jan. 6th hearings that Biggs was one of those who pressured him to decertify Arizona’s 2020 presidential results.

Those opposing McCarthy are members of the House Freedom Caucus and allege that McCarthy is insufficiently conservative and is too willing to compromise with Democrats on spending issues.  The mainstream press identifies them as "conservative" or "far-right" but it is hard to know if they are genuinely concerned that McCarthy is insufficiently conservative or if he is insufficiently a Trump loyalist. Not all Trumpinista Congressmen are opposing McCarthy.  Nut-job Trumpinista Congressman Majorie Taylor Greene is supporting McCarthy.  

I suspect that eventually McCarthy will be elected speaker.  It takes 218 votes to be elected speaker if everyone votes and Briggs cannot come close to getting that number.  Democrats are supporting Democrat Congressman Hakeem Jeffries. On the first ballot, Jeffries got 212 votes but there is almost no chance that six Republicans would break rank to vote for him. Likewise, there is almost no chance that a significant number of Democrats would break rank to elect McCarthy. McCarthy has already made some concessions to Republicans leery of supporting him. What is most likely to happen is that McCarthy will keep cutting deals and making concessions until he gets to 218 but we will end up with a very weak speaker. Or, McCarthy could cut deals with Democrats to get a significant number of them to simply abstain so he could be elected with less than 218 votes. In any event, we can look forward to a weak Speaker and an undisciplined weak Republican majority in the House. 

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