Minor skirmish

Closing In on Stimulus Deal, Lawmakers Clash Over Fed’s Role

Democrats worked to include more emergency aid to states while Republicans moved to prevent the Federal Reserve from restarting loan programs.

Democrats were mounting a last-ditch effort to provide emergency aid to states, which they argued was critical to helping governments weather the pandemic and avoid huge layoffs and cuts in services that could reverberate through the economy. Republicans were working to limit the power of the Federal Reserve to provide credit to businesses, municipalities or other institutions in the future, both by rescinding money earmarked to support Fed lending programs and preventing the central bank from restarting them using different funds.

This is after the revenue sharing fail. The issue is Illinois first which is the immediate one that needs to borrow from the Fed.   That is also a tax hike, a hike on the municipal bond market as gains go to Treasury, collected just like a tax.  Make no mistake, this is a minor offshoot in the great tax battle.

We have the hidden Markov model, the effect of state scale problems.  There is an amount of regret that revenue sharing failed.  We cannot maintain balance well using earmarks. But, hey folks, now that I have my 600 I can go another round, the impetus is gone. We are doing a smaller can kick and will see this revisited under Biden. An agreement to remain contracted for another quarter.

Follow the money money, my 600. Half my monthly is are strictly cash in and out.  I run an S/L account with the local grocer.

The other half is a single fiat account. Official money in and written back out on property taxes. The county takes the property taxes straight to the pension fund.  There is no measurable economic activity going on, and that means no local tax opportunities. And that is velocity approaching a bottom barrier. The Fed is taking all the sales taxes and government value chain is barely hanging on.

In about four different manners, that Fed seigniorage is taking its toll on power to tax, states rights, sanctity of debt, due process and coinage power.  The Fed has little choice under current law, and we will be visiting the Supremes on this soon. We have already had a court battle on due process membership at the Fed. This becomes part of the great tax battle.