Power Bottom Task Force

Like a chaser to a shot, let's take a reprieve from catastrophizing to engage in some FedWatch fun. It's been close to a year since the last installment of my Interest Rate Observer. There's much to catch up on, the foremost being the state of the polycule.

I am pleased to report that we have reached over 100 members. You read that right: I have over one hundred girlfriends (plus a few boyfriends). It's gotten to the point that we're considering incorporating as an investment company in the great state of Maryland, owing to the beneficial nature of the Maryland General Corporation Law for our purposes.1

What's Up With Warsh?

Kevin Warsh is the 17th Chair of the Federal Reserve. He is also the husband of Jane Lauder, billionaire heiress of the Lauder family, whose patriarch is a longtime ally of President Donald Trump; considering we are all peasants living under technofeudalism, a return to medieval patronage shouldn't be all that surprising.

Warsh is notable for both his insistence on foregoing forward guidance and the creation of five task forces. The former choice I don't have a problem with - we may as well let the Big Beautiful Bond Market digest the state of the economy and present inflation instead of being hand-held by the Fed.

I do have a bone to pick with the latter, however, but it may not be what you'd expect.

Fiscal Autofellatio

Those who know me know that I'm a rabid Sonic the Hedgehog fan, having contributed many thousands of words to the Sonic fandom on AO3. Therefore, it wouldn't be out of the ordinary for me to be against the appointment of Doctor Eggman2 to the "Productivity and Jobs" task force.

My quarrel is in fact with the choice of William White for the "Inflation Frameworks" task force. Not only did White previously work for the Bank for International Settlements, which itself should disqualify him as being a sus necromancer, he has served as a career bureaucrat in the deepest crevices of the international financial system.

To quote the great cybernetics thinker Stafford Beer:

The purpose of a system is what it does.

You would be forgiven for thinking White is at odds with both Warsh and the current direction of Fed policy. Noteworthy for challenging Greenspan in 2003 at Jackson Hole, on the surface White is precisely the person you'd want if the worry is inflation: he's a man concerned with credit. This is especially relevant today with the circular financing so common in the AI capex boom.

My apprehension isn't that White's place on the task force is a fig leaf for loose monetary policy - I believe, to some degree, the FOMC are sincere in their hand-wringing on inflation. Nor do I think the game plan is to pull the proverbial ladder up after Powell's post-COVID years of juicing the market.3

As a dying empire with a trillion-dollar military that can't even beat a country that's been under sanctions since 1979, the United States' sole card to play in its global war on multipolar capitalism4 is financial and economic. That is, barring mutually assured destruction in nuclear armageddon, the declining hegemon can maintain the status quo with its other most powerful weapon: Wall Street. Not only is the dollar the global reserve currency, but the country's privileged place as the spot to park capital gives it untold leverage.

Stenographers for Capital

All mainstream economists are stenographers for capital (and even some of the heterodox ones). That is, they observe an artificially constructed system, study its behaviors, and report facts and frameworks back to the peasantry as if such machinations are the natural order of things. Don't get me wrong, I love capitalism, but I'm not so stupid as to think it's anything more than a system that has outlived its usefulness, running purely on inertia. It's akin to observing algal blooms and declaring that, well, cyanobacteria just does that - without taking into account the source of nitrogen necessary to perpetetuate such an explosion of growth.

Ironically, White and I agree on the state of the system and its general trajectory. However, it's in the remedies (or lack thereof) where we are at odds. Take for example The Case for Pessimism (PDF):

Ordinary citizens must accept that, in an "age of scarcity," their only choice is between "half a loaf or no loaf at all." These requirements are difficult and unlikely to be met in practice, implying that one of the other three possibilities will be chosen as offering an easier path going forward. Sadly, each one of these alternative paths is likely to prove much more dangerous than is currently anticipated.

Pay no mind to the man behind the curtain little guy, just be happy you've got any bread at all to eat. If you think I'm purposely taking the man's words out of context, what about this excerpt from this essay on the global polycrisis (PDF):

Moreover, the costs of climate change mitigation are substantial; the International Energy Authority estimates that meeting electrification targets alone will cost between four and six percent of global GDP each year for the foreseeable future. To make such investments in a world of constrained supply (in part due to actual climate change) will almost inevitably require a reduction in living standards.

The man has the audacity to write such bullshit while China nearly doubled nuclear power capacity since 2016. Americans are aghast at China's "Electrostate" - those mystical Orients and their stupefying political economy invest in productive assets and industrial capacity?! William White is not only a stenographer for capital, he is so blinded by ideology that Helen Keller would pity him.

As somebody sympathetic to degrowth5 I understand the need to be realistic with people - especially Americans addicted to their "treats" - but the idea that this will be enforced equally is laughable. The rich will continue being the greatest source of emissions so long as the fundamental political economy remains unchanged. It will simply amount to austerity for us proles.

Chances are groceries won't be getting any cheaper and this line will keep going up.