Debt Ceiling

 

Sixteen Tons

You load 16 tons, what do you get?
Another day older and deeper in debt
St. Peter, don't you call me 'cause I can't go
I owe my soul to the company store

Debt is bad, but the alternative is worse.

The US is facing a debt crisis of its own making. Its Congress is responsible for all spending and revenue bills. If revenue is insufficient to match spending, then debt is a way of time shifting revenue from the future. So if Congress has authorized spending, and Congress has authorized revenue, then Congress has de facto authorized debt.

If spending increases because of price inflation, and revenue is lowered because of inflation (e.g. the tax brackets are adjusted for inflation) they why isn't the debt ceiling also adjusted for inflation.

You might not be old enough to remember, but there was a time when prices were more stable than today. Then Nixon (er…wasn’t he a Republican) applied his Shock and dollars that were used in international trade could no longer be used to trade for US gold, so they competed with domestic dollars to buy other assets and unsurprisingly inflation was the result.            
https://dbeagan.blogspot.com/2018/08/the-happening-riding-high-on-top-of.html

Then Reagan (er... wasn’t he a Republican too?) promoted the first of what became many tax, revenue, cuts. https://dbeagan.blogspot.com/2020/06/taxman.html So if you cut revenue, and have inflation increasing spending, then don’t you need more debt??

Congress pretends that it also has a debt ceiling. (I guess Congress forgot that it authorized spending and revenue). That debt ceiling was last raised in 2021. At that time, the debt ceiling was set at 31.4 trillion dollars, but isn’t that in 2021 dollars. If that debt ceiling was expressed in 2022 dollars, then it would have been $33.91 trillion. So if revenue is in 2023 dollars and spending is in 2023 dollars, then why isn’t the debt ceiling also in 2023 dollars. If the debt ceiling is $33.91 trillion, or even higher given the fact that we are in 2023 not 2022, before Democrats start talking with the Republican House, if Republicans caused inflation to increase spending, and Republican tax cuts have decreased revenue, then why doesn’t the principle of "you broke it, you own it" apply?

George Santos

 

Liar, Liar

Liar, liar, pants on fire
Your nose is longer than a telephone wire
If you keep on tellin' me those lies
Still goin' out with other guys
There'll come a day I'll be gone
Take my advice, won't be long

Bad news, George Santos!

Wining a primary is not winning the general election, as was demonstrated during the recent mid-terms.  Governing, either by administering the laws, the Executive branch, or making the laws, the Legislative branch, is even more of a difference.  You govern for all for all of the people, so voters want to know a candidate's' policies. Voters probably want  to elect a "Good Shepherd", not a "Boy that Cries Wolf".

The US House of Representatives is currently 435 people.  The population of the United States in 2020 was 331.1 million according to the draft reapportionment figures. Thus each congressperson should represent over 760,000 people.  That they do not is because the Congress has not adopted the Wyoming rule, and instead tries to allocate congressional districts using the Method of Equal Proportions, as provided for in Title 2, United States Code, Sections 2a and 2b. Thus Wyoming's lone congressional seat represents over 577,000 people, while Delaware’s lone seat represents over 990,000 people. But I digress.

I have never met my congressional representative, nor do I expect to.  I also don’t personally know a thousand people, never mind 700 thousand.  Since my intention is to be represented by someone who will look out for the interests of me and my entire district, I look for someone, such as a veteran who has already demonstrated a System Optimal strategy.  If someone does act for themself, a User Optimal strategy, I look for the wealthy because I hope that, even if they can be bought, their price is very, very high.  But barring a veteran or the wealthy, I have to trust the endorsements of the primary political parties, Democrats or Republicans.   

I don’t mean to shock you, but people can lie.  My hope is that those political parties have vetted the person that they are endorsing.  In the case of George Santos, the Republican party clearly did not examine the candidate, or else they would have known he was a pathological liar who lied about almost every aspect of his life.  Is George Santos a representative of me? No, and that also appears to be the opinion of the people of Long Island that he was supposed to represent.  He might have won election in 2022 but….Fool me once, shame on you.  Fool me twice, shame on me.

Tolerance II

 

This Is Me

When the sharpest words wanna cut me down
I'm gonna send a flood, gonna drown 'em out
I am brave, I am bruised
I am who I'm meant to be, this is me
Look out 'cause here I come
And I'm marching on to the beat I drum
I'm not scared to be seen
I make no apologies, this is me

Tolerance works both ways.

Justices Alito, Thomas, and Gorsuch are doing their best to prove Charles Dickens was right in Oliver Twist. They are casting doubt on the 1977 ruling of the Supreme Court that if an employer makes reasonable accommodations for religion, where reasonable accommodations are those that cause a minor, or "de minimis," cost, there is no religious discrimination. SCOTUS is hearing a case where an evangelical associate rural mail carrier, Gerald Groff, refused to work on Sunday. The employer, in this case the US Postal Service, did not fire the employee or force him to work on Sunday. Postal officials sought to accommodate Groff by attempting to facilitate Sunday shift swaps, but the effort was not always successful. As a result, his absences caused resentment among other carriers who had to cover his shifts and ultimately led one to leave the rural post office and another to quit the Postal Service altogether, according to court papers. Groff received several disciplinary letters for his attendance and resigned in 2019.  Groff seems to be arguing that any disciplinary letters at all were religious discrimination, and the fact that he resigned, and was not fired, was religious discrimination.

The case might be dismissed, by deciding that Groff does not have standing because he resigned. IMHO, that would be a mistake. The case is one of the rights of an individual vs. the rights of the group, which is precisely the kind of cases the Supreme Court should decide. Are the rights to practice religion absolute and the group must accept the decision of the individual, or can the group impose reasonable limits and say that while it tolerates the religious beliefs of an individual that does NOT mean that the religious beliefs of the individual are the beliefs of the group.

IMHO, this is no different than the 303 Creative case. Any beliefs of an individual, or a minority within in a group, should be tolerated, but that does not mean that the group accepts those beliefs. Tolerance, reasonable accommodations, is different from acceptance. The problem seems to be when an individual thinks his rights are correct and absolute and the group does not agree. That individual should also tolerate the group, as much as the group is expected to tolerate the individual. In the words of Eddie Murphy at the Golden Globes, “Pay your taxes. Mind your business…. And keep Will Smith's wife's name out your f---ing mouth!

Inflation VII

 

I Can’t Make You Love Me

'Cause I can't make you love me if you don't
You can't make your heart feel something it won't
Here in the dark, in these final hours
I will lay down my heart and I'll feel the power
But you won't, no you won't
'Cause I can't make you love me, if you don't

Trying to make demand when there is no demand is just as bad.

I have argued in previous blog posts that inflation has two parts, long-term currency inflation. https://dbeagan.blogspot.com/2018/08/the-happening-riding-high-on-top-of.html and short-term product inflation  https://dbeagan.blogspot.com/2022/02/inflation-predictions.html.

In the most recent episode of the Planet Money podcast they discussed the 2% inflation target. https://www.npr.org/2023/01/13/1149071772/two-percent-target-inflation-expectations. It was argued that an inflation of 2% was tolerable because if someone takes 2% of your beer you won’t notice. But if someone continually takes 2% of your beer, you might not notice on each sip, but eventually you will have no beer. To prevent this a zero percent inflation target sounds like even more of a more reasonable target.

Zero percent was discussed and dismissed because the US central bank, the Federal Reserve, can’t lower its interest rate below zero when inflation goes below zero, i.e. deflation. I would argue that this confuses the role of the Fed. It’s role to serve as the lender of last resort, to provide liquidity to smaller local banks and provide for the nation's currency. It has done this, has prevented runs on banks, and successfully transitioned the US to a fiat currency where the fiat is constrained by the US economy. However since the dollar is also used in international trade, the constraint should arguably be the international economy, not just the US economy. That it is only constrained by the US economy means that  there is more demand than there are US dollars, and currency inflation has been the result.

Product inflation has much more to do with product supply and demand. If the interest rate goes up, then the cost of producing goods goes up. and supply is reduced. If the interest rate goes up, then there is a time shifting of demand from tomorrow to today. Since price is when marginal cost is equal to marginal demand, changing supply and demand can affect prices. However as noted, you can time shift demand, but you can’t create demand.

The goal of currency inflation should be zero. There should be no goal for product inflation and just an acceptance of whatever supply and demand  randomly dictates for product prices. Supply can be contracted by increasing interest rates. Demand can be shifted in time but not created. Maybe setting interest rates below zero to increase supply is impossible ( but isn't that what tax credits and other subsidies do?). The hubris of thinking that we can control short-term product inflation has led the Fed to think that it can control total inflation. As long as long-term currency inflation is zero, even if short-term product inflation is sometimes greater than zero and sometimes less than zero, that should be expected and tolerated.

Engineers

 

Theme from Star Trek

I know his journey ends never
His star trek will go on forever.
But tell him while he wanders his starry sea
Remember, remember me

To boldly go where no man has gone before.

I am an equal opportunity nerd.  I read the novelization of Star Wars before attending the premier of the movie ( now called Episode Four).  I wore out my box copy of the Lord of the Rings novels. Don’t test me on trivia about  comic book super heroes.  I did not pass this down to my children.  While my eldest son appears in the Behind the Scenes for the House of the Dragon, he is proud that he never saw an episode of, Game Of Thrones, even though HOD was a prequel to GOT.  But there is a special place in my heart for Star Trek because it provided a role model for me at a time when I did not know what white collar workers did. ( The lyric above is from Star Trek.  It has lyrics? Yes, instrumental TV themes often had unplayed lyrics.  Look up the Bonanza lyrics and sing along!)

At a time when my father and neighbors were all factory or other blue collar workers, Star Trek provided an engineer as a role model.  I knew that I was unsuited for the starring role of Captain Kirk, but I could aspire to be like Lieutenant  Commander Montgomery Scott who we all knew was the real keeper of the soul of the USS Enterprise, not merely the jockey of the ship.   Mr. Scott thank you for inspiring me.  I  have tried to give it Warp Factor Eight, and maybe a wee bit more.

Choose Life

 

I Am Alive

We are alive
Oh, and though we lie alone here in the dark
Our souls will rise to carry the fire and light the spark
To fight shoulder to shoulder and heart to heart
Let your mind rest easy, sleep well my friend
It's only our bodies that betray us in the end

Flat-lining means that you are dead, not alive.

A function where everyone, x, has the same value, made the same choice, if that choice is 0 or 1, is y=1 or y=0. It is a flat line. The Cumulative Distribution Function would be 0 before the choice and 1 after the choice.

A function where everyone, x, is free to make a choice, which is still 0 or 1, is a logistics distribution. The Probability Density Function of a logistics distribution is not y=0 or y=1, but is
y= e^-((x-µ)/s)/(1+ e^-((x-µ)/s)), where the e^-((x-µ)/s) is the probability of the choice, µ is where the average choice is made, and s is the range over which the choice occurs.   If you saw this reading on a Vital Signs Monitor in an ICU, you would say that this is a pulse and a sign of life. The Cumulative Distribution Function is still 0 before the range of the choice and 1 after the range of the choice.

If there is no free will, and everyone in the group agrees with you, but did not make their own choice, then there is no pulse in that group. Despite the fact that everyone agreed with you, the group has flatlined. Only if everyone in the group makes their own choice, which may not be yours, is there a pulse and the group has not flatlined. So you have a choice, the group agrees with you and is dead, or the group is free to choose a position that may disagree with you and is alive.

I will eventually die, but I want my group to still be alive.

Individuals vs. Groups

 

Opening to The Prisoner

Where am I?
In the Village.
What do you want?
Information.
Whose side are you on?
That would be telling. We want information. Information. Information.
You won't get it.
By hook or by crook, we will.
Who are you?
The new Number Two.
Who is Number One?
You are Number Six.
I am not a number- I am a free man!

You may be a free man, but is that man an individual or a group?

The cult classic TV show, The Prisoner, deals with the question of man’s place in society: are we at war with society, or part of that society. If we are not part of society, or society does not include us, then we can be at war with society. If we are part of society, then only if each individual in society is free, can society be free.

Every group, such as society, consist of individuals. If everyone in the group acts together, the behavior of a group can be described as a function. For those who have ever attended a sporting event, individuals acting in concert can create the “Wave”, a function.  Every wave has energy, and therefore a frequency and an amplitude. Material objects also can have a resonant frequency. That is why soldiers crossing a bridge are instructed to break cadence, lest their marching might accidentally be at the resonant frequency of the bridge and their energy destroy the bridge.

The whole duality paradox of light, is it a particle? or is it wave?, may be no more than the difference between the behavior of an individual photon, a particle, and a group of photons, a wave, and that duality is therefore not a paradox. In the controversial finale of The Prisoner, Number One was revealed to be number Six. Society, Number One, is the individual, Number Six. The controversy was among those who view individuals as separate from society. Number Six is not free unless Society is free.