Georgia’s congressional Democratic representatives tout the political not economic narrative on inflation.

Congress has been passing the buck on the value of money since it created the Federal Reserve System in 1913.  Article I, Section 8 of the U.S. Constitution not only provides the Congress the authority to borrow money on the credit of the United States, but to coin money and regulate both its domestic and foreign value.  Today, the two agencies to whom primary responsibility for regulating the value of money has been passed down to are the U.S. Treasury and the Board of Governors of the Federal Reserve.  President Joe Biden appeared to emphasize the “buck passing” by meeting recently with Jerome Powell, chairman of the Board of Governors.  Reportedly, Mr Biden reiterated the Federal Reserve’s political independence and that the White House would not only do its part in combating inflation, but “get the Fed to do whatever it takes.”

Between U.S. Treasury Secretary Janet Yellen taking the hit for making the wrong call last year on the transitory nature of inflation, thinking that inflation would abate a lot sooner, and what some analysts deem as poor decision making on the part of Chairman Powell for not raising rates faster, Americans are seeing the political nature of the inflation narrative. 

Mr Biden is distancing himself from the inflation narrative, a politically prudent move, since Congress long abdicated its role on the matter.  But it is a move that is both too late and tentative.  Forget that Mr Biden selected as Treasury secretary a former chairman of the Board of Governors and that Mr Biden nominated Chairman Powell to another four-year term.  Mr Biden decided to keep the inflation arrows in his quiver probably unaware of the restraints his Executive Branch is under in terms of policymaking.

By coming out swinging on the one hand that he will be laser focused on inflation, but on the other hand is ready to throw his Treasury secretary under the bus for a bad inflation call while telling the world that inflation management is really all on the Fed makes Mr Biden look weak. 

Closer to home, the Georgia representatives to Congress seemingly prefer tout Mr Biden’s increasingly waning line on supply chain constraints.  For example, U.S. Representative Nikema Williams, a Democrat representing Georgia’s 5th district, and U.S. Representative David Scott, another Democrat representing Georgia’s 13th district, have emphasized Mr Biden’s infrastructure and Build Back Better plan as a way to expand economic capacity, relieve congestion, increase jobs, and stimulate the economy.

Sitting on the other side of the inflation argument is U.S. Representative Barry Loudermilk, Republican of Georgia’s 11th district.  Inflation, according to Mr Loudermilk, is a monetary phenomenon.  One need only look at increasing asset prices, according to Mr Loudermilk, to see that inflation is a monetary issue.

Sitting somewhat in the middle is U.S. Senator Jon Ossoff. While he agrees with the President that unraveling the supply chain is one way to combat inflation, he took issue with the Federal Reserve’s pursuit of massive quantitative easing when it was clear that inflation was not transitory.

The narrative has been disingenuous on the part of Mr Biden and on the part of Georgia Democrats.  Their lane is a political lane and over 100 years ago, Congress decided that the money vehicle would not be driven in the political lane. Saying that they can do something about inflation while acknowledging the money supply is the responsibility of the Federal Reserve only confuses voters.      

Alton Drew

6 June 2022

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Stacey Abrams is not a black candidate and that’s great for Georgia’s progressive Democrats.

Stacey Abrams recent comments regarding the Democratic Party’s seeming avoidance of the term “black” versus the use of other ethnic or demographic references such as “woman of color”, “people of color” or LGBTQ+ has raised a bit of a row among the members of the “New Black Media.”  A recent YouTube video depicts the 2022 Georgia Democratic gubernatorial candidate explaining why the term is not used by herself or by other Democratic surrogates.

Ms Abrams explains in the video that proposing policies that would benefit black people in particular would not be wise given that, on a national level, blacks make up approximately 12% of the population.  Discussing distinct policies aimed solely at helping blacks given their proportion of the population would get black candidates in trouble with non-black donors.  Using terms such as “minorities”, “poor people”, “woman of color” or “people of color” keeps references to ethnicity vague and palpable for non-black donors.

Observers of political media can’t help but notice that non-black surrogates, political media strategists, and non-black candidates rarely if ever use “black” when describing that portion of the electorate that could benefit from intentionally designed income transfer programs.  Progressives rather push the “We’re all in this boat together” diatribe than focus on, for example, serious programs for closing the household wealth gap between blacks and whites. 

Such policy action plans would require specific recognition of the black racial group and discussion of the economic, financial, and legal components underlying discrimination against this group.  Fortunately for Georgia and national Democrats, Ms Abrams appears willing to tow the “We’re all in the same boat together” line to ensure non-ruffling of feathers while bringing a heaping spoonful of black votes to the polls this November.

Georgia’s black voters should bear in mind the inconvenient truth of Ms Abrams’ observation; that the proportion of black voters in Georgia does not provide blacks with the leverage necessary to produce policy outcomes of their liking.  What good is a “black slate” of voters if each voting cycle produces an empty plate? 

Ms Abrams and any other member of the black political class that uses vague ethnic and class references to describe blacks should reconsider whether running for office is an effective mechanism for channeling benefits to black people.  If you cannot even mention them by name, then you are less likely to properly denote and channel benefits to the recipients you claim to want to help.

Do blacks really need electoral candidates whose mission is to run for office so that they can represent everyone else?  Ms Abrams and other members of the black political class may want to design and deploy another political power mechanism that allows them to focus on the electorate that shares their heritage, lineage, and ethnicity while not worrying about offending people who don’t share their history.

Alton Drew

27 May 2022

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Georgia has to decide who can guide its state political economy through a rough patch of inflation

Raphael Bostic, president and chief executive officer of the Federal Reserve Bank of Atlanta, recently released a video reiterating the Board of Governors of the Federal Reserve System’s policy of achieving an inflation rate of two percent. President Bostic defined inflation as an imbalance between aggregate demand for goods and services and aggregate supply of the same.  Achieving the two percent inflation rate during a “soft landing” is achievable but will be rough, according to the Atlanta Fed president.  A soft landing is defined by Investopedia as a moderate economic slowdown following a period of growth.  Central banks line up on their economies’ runways hoping for a soft landing while raising interest rates for the purpose of curbing inflation.

The Board of Governors uses a number of monetary policy tools to curb inflation including changing its target range for the federal funds rate; buying and selling securities; changing the reserve requirements for its member banks; changing the amount of interest it charges at its discount window for loans to its member banks; and changing the amount of interest it pays on commercial bank excess reserves held at the system’s twelve federal reserve banks.

Mr Bostic also noted an apparent imbalance in the United States’ labor markets where only 60% of available and open jobs have been filled.  There is where I think about the state of Georgia’s management of the political economy.

The role of government is to act as a transfer agent between taxpayers and bondholders.  Government taxes the spread between a taxpayer’s work efforts and what the taxpayer yields from those efforts.  Government takes its cut and passes on the rest to its bondholders.  As a people manager, government creates narratives to encourage more yield and implements policies to encourage or support actions that create that yield.

State governments are less incubators of democracy and more incubators of tax-generating activities.

In the case of Georgia, bond holders and bond traders should not only keep their ears open to narrative spun by Georgia’s gubernatorial candidates, but keep their eyes open when reading the policies proposed by the candidates.  How well do their proposals lend to the need for yield creation?  Are their proposals designed solely to tug at heart strings or can proposals be tied to activities that ultimately increase yield from taxpayers that can ultimately be transferred to bond holders?

Followers of state elections rarely if ever tie state government policies to national dollar and monetary policies.  I think bond holders and bond traders should start looking at state and federal governance of the American political economy to best understand how well the United States is doing on generating yield.          

 Alton Drew

25 May 2022

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Candidates for Georgia governor should be mindful of price appreciation for yuan vs dollar.

I was curious about demand for the U.S. dollar versus the Chinese yuan in terms of the British pound, the euro, and the Indian rupee. Given the state of Georgia’s export efforts, I wanted to determine what Georgia should be keeping its eyes open for when it comes to competition between the dollar and the yuan.

Georgia’s gubernatorial campaign is heating up. It has been my experience that candidates nary make mention of export efforts. If you are going to talk about exports, you have to talk about currencies. From what I have gathered so far, only Libertarian Party candidate Shane Hazel has provided serious discussion about currencies. Democratic Party candidate Stacey Abrams and the Republican incumbent governor Brian Kemp have been pretty much mum on the topic.

Now, using data from OANDA, a look at the numbers. During the period 11 February 2021 to 11 February 2022, the price of the US dollar in terms of the British pound has appreciated two percent in price from GBP0.72283 to GBP0.73733. In terms of the euro, the dollar has appreciated six percent over the same period from EUR0.82467 to EUR0.87449. In terms of the Indian rupee, we see price appreciation of three percent from INR72.8104 to INR74.9521.

Compare the above with appreciation of the dollar price in terms of the yuan. Between 11 February 2021 and 11 February 2022, the price of the Chinese yuan in terms of the British pound rose just over three percent from GBP0.11207 to GBP0.11593. In terms of the euro, the yuan appreciated over seven percent from EUR0.12786 to EUR0.1375. Lastly, in terms of the Indian rupee, the yuan appreciated over four percent from INR11.2885 to INR11.7846.

There is a currency war brewing between China and the United States. This war tends to get mentioned in passing during broader political discussions in Washington, DC about the economic and competitive threat China poses to the United States. What gets overlooked is Europe’s political and geographic middle position. Europe has been buying less expensive technology from China; thus has a demand for Chinese currency. In addition, with the Federal Reserve preparing to hike overnight interbank lending rates as early as next month, Georgia’s exporters may be seeing an increase in the cost of doing business and may seek assistance from the state to help keep their prices competitive globally.

The candidates should be contributing to the conversation on trade, preferably encouraging policies that facilitate infrastructure investment. The conversation should begin with an appreciation for what’s happening in the currency markets.

Alton Drew


A quick thought: Quieted by a 50-50 Senate split …

“A 50-50 split in the Senate with a reduced Democratic majority in the House not only puts the GOP back into their familiar position as “obstructionist”, but gives Biden-Harris some cover to not present as progressive an agenda as the Far Left would like to see. Centrist and center-right senators like Angus King, Susan Collins, Rand Paul, and Joe Manchin will take more of the spotlight.

Mitch McConnell will still play the “parliamentarian” role, using Senate rules to delay floor debates, filibuster, or, if he is lucky, table certain items.

The last thing Kamala Harris will want, as president of the Senate, is the optics of having to do a yay or nay on any progressive legislation. She’d rather Collins, Paul, and Company head off any controversial bills before they hit the floor for a vote. She can’t afford to enter the 2024 presidential race inaccurately labeled a progressive.

Commodity, currency, and energy traders may get over their initial nervousness about the volatility a liberal Congress may introduce when they realize that the “adults” are finally in charge …