Most people familiar with the Federal Reserve have heard of the bank's "dual mandate" to balance unemployment and inflation, and maybe they are even familiar with its much-ignored requirement to maintain the stability of the currency. Now, progressives in Congress and are pushing Joe Biden to fire current Fed chairman, Jerome Powell, so he can be replaced with someone who will refocus the Fed's mission on "eliminating climate risk and advancing racial and economic justice." If that were even possible, it would mean an end to Federal Reserve independence. The new "woke" mandates are being … [Read more...]

Inflation is transitory according to the Fed. Powell and company tell us it is supply constraints that are boosting prices. While this may be true to some extent, excess demand from trillions being dumped on consumers by governments and pumped into the financial system by central banks is also having an impact and potentially a more lasting impact. The WSJ reports today that Taiwan Semiconductor is raising prices on its most basic chips by up to 20% and 10% for its more advanced chips. Taiwan semi is the world's largest chip maker. You can be sure others will follow suit. With demand as … [Read more...]

James Mackintosh, writing in the WSJ, outlines two possible outcomes for financial markets when the Fed decides to taper its bond buying program. While it would seem logical that pulling back on a massive $1.4 trillion annual bond buying program should push bond yields higher, there is no guarantee. If investors view the Fed's tapering decision as a sign of tighter monetary policy, it is possible yields will not rise much. We would still lean toward the former scenario playing out as we struggle to see what economic buyer would want to step in to fill a $1.4 trillion void left by the Fed at … [Read more...]

Writing in the WSJ, Josef Joffe explains how Biden is seeking to reshape government's role in the economy. Emphasis is ours. President Biden’s tax plans might soon make Europe look like a capitalist heaven by comparison. He wants to raise the long-term capital-gains tax from just below 24% to above 43%. Switzerland has no such tax. In Britain, inventor of the welfare state, it is 20% and in Germany 26%. On income tax, the U.S. may soon top the scale. Mr. Biden wants a top marginal income-tax rate of just below 40%. Add state and local income taxes, like California’s 13.3% for top earners, and … [Read more...]