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Authored by Tho Bishop via The Mises Institute,

This week, Donald Trump formally nominated Judy Shelton and Christopher Waller for vacant governorships on the Federal Reserve. Waller, the Vice President of the Richmond Fed, is widely viewed as a standard Fed nominee with the reputation of being a “dove” who has criticized recent interest rate hikes.

It is Judy Shelton who is particularly interesting.

A former campaign adviser for Trump, Shelton has been a vocal Fed critic who has praised the gold standard in the past. While she has recently advocated for lower interest rates, she has also been a critic of the Fed’s policy of paying interest on excess reserves that has become a key policy tool since 2008. Shelton’s nomination is also interesting  due to her background standing in stark contrast to most of her colleagues. 

As Joseph Salerno has noted:

The good news is that Ms. Shelton is not a technically trained academic economist, indoctrinated in the prevailing orthodoxy. She holds a doctorate in business administration from the University of Utah and has spent most of her career in the world of free-market policy think tanks, including stints at the Hoover Institute and the Atlas Network. She also writes refreshingly and articulately in favor of the gold standard, or some version of it.

The bad news is that she leans heavily toward supply-side economics, which is deeply flawed on monetary policy. Like most supply-siders, the position she advocates may be summed up in the motto, “I favor sound money—and plenty of it.”

Still, though by no means an Austrian, Shelton’s voice on the Fed would create some much needed ideological diversity to the central bank.

In reacting to an interview with Ms. Shelton last June, Jeff Deist wrote:

Her comments represent the most substantive attack on the Fed, and central banking generally, by any potential nominee to the Fed board in recent history. She not only challenges how Jerome Powell and Fed officials conduct monetary policy, but whether they can conduct it competently at all….

So Shelton doesn’t want to End the Fed. But in the parlance of woke America, she’s an “ally.” Recognizing the limits of central bank omniscience, and challenging its benevolence, are important first steps on the road to redeeming our money and our economy. 

In fact, it was precisely these unorthodox views that make her nomination a less-than-sure thing, even with a Republican-controlled Congress.  As Bob Murphy has noted, her competency in financial history has made her the target of criticism from establishment powers on both left and right. Particularly of issue is comments made by Republican Senators, often offering criticism with intellectual depth on par with their colleague Ms. Ocasio-Cortez. For example, when asked about Shelton’s views on gold, Senator Richard Shelby, the Chairman of the Senate Banking Committee, could only offer:

The gold standard would probably shatter a lot of people’s dreams around the world right now…There was a reason to get off of it.

The fact that the administration insisted on nominating Shelton, in spite of the public concerns, demonstrates a certain level of confidence that her nomination will not be shot down. 

What’s particularly interesting is that CNBC notes that there has been speculation that Shelton could be a potential for Jerome Powell if Trump is still in office at the end of the Fed chair’s term in 2022. If so, that would bring someone who the Wall Street Journal described as a “goldbug” to the office of America’s top central banker.

Of course, as Alan Greenspan’s tenure showed, that may not actually mean much.

Ever since Virginia’s Democrats retook the state assembly and Senate in November, Democratic Gov. Ralph “blackface” Northam and the legislature have been gearing up to pass a draconian gun control bill.

Unsurprisingly, many Virginians feel strongly about preserving their second amendment rights, and the state has traditionally enforced a more permissive stance toward firearm ownership. But now, lawmakers are tossing around ideas like an “assault weapons ban” – language that has been criticized as vague and even nonsensical. Several moderate Democrats have even expressed reservations about supporting a sweeping gun-control bill if it includes the ban.

“A lot of people don’t really understand assault weapons and how complicated the issue really is,” said Democratic Sen. John Edwards. “It’s going to be very difficult to figure out a way to do it. But we’re studying it, that’s all I can say.”

And yet, lawmakers are pressing ahead, prompting a vicious backlash that has even prompted Gov. Northam to declare a state of Emergency because armed militia groups planned to storm the capitol.

As the gun-control debate rages, thousands of Virginians have been rushing to gun stores across the state to buy up firearms before it’s too late.

Per Fox 5 Washington DC:

“Business has been absolutely crazy,” explained Jerry Rapp, owner of SpecDive Tactical in Alexandria. Rapp said business has increased by 200 to 300 percent since the last election, although that doesn’t mean the news is all good for the gun shop owner and his customers. “People are really on edge. They’re worried about their Second Amendment rights. They’re worried about the future of what you can and cannot have as a firearm.”

As one gun buyer put it, since Democrats have expressed open hostility to the 2nd Amendment, it makes more sense to just be prepared.

“If they’re willing to make laws that will strip your second amendment right, I mean who’s to say what could happen, so yeah, I’m gonna get it while I can,” Roberson said.

According to FBI data, the number of firearm background checks ballooned in Virginia last month to nearly 77,000, up from 53,000 a year before. That’s an increase of roughly 45%. That’s in keeping with a national trend that we highlighted earlier this month.

President Trump has even chimed in, warning that your “2nd Amendment is under very serious attack”.

Your 2nd Amendment is under very serious attack in the Great Commonwealth of Virginia. That’s what happens when you vote for Democrats, they will take your guns away. Republicans will win Virginia in 2020. Thank you Dems!

— Donald J. Trump (@realDonaldTrump) January 17, 2020

Meanwhile, communities across Virginia are already looking into ways to sidestep any new state laws. The map below shows the counties that have enacted, or are considering, “Second Amendment Sanctuary” legislation.

The gun control debate has already ratcheted up tensions across the state. And things are only just getting started.

Authored by Alan Dershowtiz via The Gatestone Institute,

U.S. Government Accountability Office (GAO) has gotten the constitutional law exactly backwards. It said that the “faithful execution of the law” – the Impoundment Control Act- “does not permit the president to substitute his own policy priorities for those congress has enacted into law .”

Yes, it does – when it comes to foreign policy.

The Constitution allocates to the president sole authority over foreign policy (short of declaring war or signing a treaty). It does not permit Congress to substitute its foreign policy preferences for those of the president.

To the extent that the statute at issue constrains the power of the president to conduct foreign policy, it is unconstitutional.

Consider the following hypothetical situation: Congress allocates funds to Cuba (or Iran or Venezuela). The president says that is inconsistent with his foreign policy and refuses to release the funds. Surely the president would be within his constitutional authority. Or consider the actual situation that former President Barack Obama created when he unilaterally made the Iran deal and sent that enemy of America billions of dollars without congressional approval. I do not recall the GAO complaining about that presidential decision, despite the reality that the Iran deal was, in effect, a treaty that should require senate approval that was never given.

Whatever one may think about the substantive merits of what President Donald Trump did or did not do with regard to the Ukrainian money— which was eventually sent without strings —he certainly had the authority to delay sending the funds. The GAO was simply wrong in alleging that he violated the law, which includes the Constitution, by doing so.

To be sure, the statute requires notification to Congress, but if such notification significantly delays the president from implementing his foreign policy at a time of his choice, that too would raise serious constitutional issues.

Why then would a nonpartisan agency get it so wrong as a matter of constitutional law.

There are two obvious answers:

1. In the age of Trump there is no such thing as nonpartisan. The political world is largely divided into people who hate and people who love President Trump. This is as true of long term civil servants as it is of partisan politicians. We have seen this with regard to the FBI, the CIA, the Fed and other government agencies that are supposed to be nonpartisan. There are of course exceptions such as the inspector general of the Department of Justice who seems genuinely non-partisan. But most civil servants share the nationwide trend of picking sides. The GAO does not seem immune to this divisiveness.

2. Even if the GAO were non-partisan in the sense of preferring one political party over the other, it is partial to Congress over the president. The GAO is a congressional body. It is part of the legislative, not executive, branch. As such, it favors congressional prerogatives over executive power. It is not surprising therefore that it would elevate the authority of Congress to enact legislation over that of the president to conduct foreign policy.

In any event, even if the GAO were correct in its legal conclusion — which it is not— the alleged violation would be neither a crime nor an impeachable offense. It would be a civil violation subject to a civil remedy, as were the numerous violations alleged by the GAO with regard to other presidents. Those alleged violations were barely noted by the media. But in the hyper-partisan impeachment atmosphere, this report received breathless “breaking news” coverage and a demand for inclusion among the articles of impeachment.

If Congress and its GAO truly believe that President Trump violated the law, let them go to court and seek the civil remedy provided by the law. But let us not continue to water down the constitutional criteria for impeachment by including highly questionable, and on my view wrongheaded, views about violations of an unconstitutional civil law.

A long ‘most wanted’ ISIS mufti responsible for ordering gruesome killings, kidnappings, rapes, as well as the destruction of the northern Iraqi city of Mosul’s ancient heritage has been captured by an elite Iraqi SWAT team raid.

The massively obese terror leader named Shifa al-Nima, known within the Islamic State as Abu Abdul Bari, has been dubbed “Jabba the Jihadi” and photos posted online showed that after his capture police had to load him onto the back of a flatbed truck to accommodate his some 560-pounds. 

Considered one of the biggest captures in recent months due to his heading up still active but underground “ISIS gangs” in the region, he was nabbed at his hideout in Mosul earlier this week. Lately he was known to issue sermons and messages to his followers to target Iraqi police. 

And according to an Iraqi police statement, “He is considered one of the foremost leaders of ISIS and was responsible for issuing fatwas that led to the murder of scholars and clerics.”

The fat mufti was also well-known for issuing a fatwa in 2014 to bomb one of Mosul’s most revered pilgrimage sites — a mosque believed to be site of the tomb of the Prophet Jonah — which attracted Muslims and Christians alike.

I’m delighted to say that the Islamic States very own Jabba the Hut has been captured in Mosul.
Responsible for the execution of men, women and children.
This animal raped and murdered.

Good luck hanging him Iraq 😬 pic.twitter.com/r1naWIXYMA

— Macer Gifford (@macergifford) January 16, 2020

The Islamic State’s strict Wahhabi interpretation of Islam forbids such veneration of tombs or religious places, and therefore sought to demolish any historical site it considered ‘unIslamic’. 

The military news outlet Stars & Stripes detailed some among the more popular memes which spread online in the wake of the ISIS cleric’s capture: 

Memes including “He puts the fat in fatwa” spread on social media after photos were posted of Bari seated on cushions inside his apparent hideout in one image and loaded into the back of a pickup truck in another.

The images of his arrest would strike a psychological blow against ISIS, Maajid Nawaz, founder of the London-based counter-extremist organization Quilliam, wrote on Facebook.

“Gluttony is frowned upon by jihadists. But also, ISIS branded themselves as fighters possessing rare courage & discipline… meanwhile this walrus was their top religious cleric,” he said.

Iraqi police suggest he was still making appearances in local mosques long after ISIS reign of terror, inciting hatred and violence against police and Iraqi leaders. 

Nima was captured in Mansour neighborhood of Mosul by the Nineveh police command and is now in prison, awaiting trial, after which he could face execution. 

Authored by MN Gordon via EconomicPrism.com,

Practically the entirety of Congress now believes that the ability to pay should not limit the ability to promise people whatever they want.  There’s no poll of members of Congress to support this assertion.  We base it on what they’ve communicated by real, material actions.

Remember, per the Constitution, Congress – and in particular, the House of Representatives – is vested with the “power of the purse.”  They retain the authority to tax and spend public money for the federal government.  Over the last 50 years Congress has demonstrated they give less than half a rip about the government’s ability to pay.

Congress may be good at taxing.  But they’re even better at spending.  According to the Treasury Department, the annual budget deficit, the shortfall between tax receipts and spending, for the 2019 calendar year topped $1.02 trillion.  But that’s nothing…

The budget deficit for the first three months of the 2020 fiscal year, which started in October, is up 12 percent over this time last year.  Specifically, the deficit for the first three months of the 2020 fiscal year is $357 billion.  At this rate, the annual 2020 fiscal year deficit will eclipse $1.4 trillion.

The deficit, of course, is funded with Treasury debt.  And since mid-October, nearly half the Treasury debt has been purchased by the Federal Reserve.  If you recall, starting in mid-October, the Fed began conjuring money out of thin air at a rate of $60 billion a month for the sole purpose of buying Treasuries.

Over the next decade, as debt and deficits go vertical, more and more of the Treasury’s borrowing will be financed via the printing press.  Here’s why…

Inverted Pyramid

New U.S. Census Bureau figures show that the U.S. population is growing at an annual rate of 0.48 percent.  If it wasn’t for immigrants, which are entering the USA at a reduced rate, the U.S. population would be in decline.  Business Insider offered several anecdotes:

“The census data capped 10 years of sluggish US population growth.  The 2010s may enter the record books as the slowest decade in population growth since the first Census in 1790….  And low fertility and an increase in deaths are projected to continue into the 2020s.

“The prospect of demographic stagnation is playing a critical role in projections of slower U.S. economic growth over the next decade, given smaller increases in the numbers of working-age Americans and as baby boomers continue retiring.  Going forward, a ballooning number of retirees would rely on a shrinking number of workers to power the economy.”

Quite frankly, this ‘going forward’ scenario is unworkable.

You see, when an economy’s supported by a young and growing demographic, the burden of public debt quickly dissipate.  At the local level, long term municipal bonds are issued, and then repaid by a larger and more prosperous tax base.  Public pension funds also work reasonably well when supported by a growing work force.

But as the economy ages, and growth stalls, the legacy costs become insurmountable.  In effect, the age demographic transitions from a well-functioning pyramid, with a large base of workers supporting a small tip of retirees, to a top heavy inverted pyramid.

By then the public grifters, like intestinal tapeworms, have taken control from the inside.  Rather than making a course correction, they devour their host.  That’s when the gig is finally up.

Local governments default.  Pensioners get the shaft.  Public services diminish.  Infrastructure falls to derelict, decay and disrepair.  And formerly grand properties degenerate to single room occupancy housing for the wicked…much like Los Angeles’s Hotel Alexandria in the 1990s.

Living On Borrowed Time

At the national level, the rules are a bit different.  With the Fed and Treasury working in concert with a fiat dollar, and Congress raising the debt ceiling with little reservation, it is impossible for the U.S. government to technically default.  However, to keep perpetuating more and more debt, the Fed and Treasury resort to mass currency debasement.

As noted above, the Fed is currently printing $60 billion a month and loaning it to the Treasury.  This is financing about 50 percent of the deficit through the first quarter of fiscal year 2020.  Moreover, this $60 billion a month is in addition to the nightly liquidity blasts of upwards of $80 billion the Fed applies to the overnight funding market to price fix the repo rate below 2 percent as part of its program of repo madness.

Without the Fed’s fake money intervention, Washington would be forced to raise taxes, reduce spending, accept a much higher interest rate, and default.  The progression would happen in short order.  Plus, the financial system would blowout to the extreme.

Yet there’s no turning back.  There’s no graceful way out.  There’s no backing away from QE or repo madness.

When it comes down to it, population and age demographics make it impossible to support the accumulated debt of yesterday’s spending.  The likelihood of growing our way out of this mess is next to none.

So what are we left with?  We’re left with debt financing by way of fake money from the Fed.

Make no mistake, we’re living on borrowed time.  The day will come when the costs of debt monetization exceeds any benefits.  That’s when those costs will be paid with ruinous price inflation.  And, as it happens, ruinous price inflation is very costly.

In the meantime, everything’s awesome.  Shares of Tesla are trading at over $500.  Somebody say amen.

The National Weather Service (NWS) warned a powerful winter storm could affect travel for millions of people across the Midwest and Northeast this weekend.

A significant winter storm continues to impact areas from the Midwest and Northern Plains to the Ohio Valley. Meanwhile, snow is pushing into the Mid-Atlantic and Northeast this morning, and will gradually change to sleet and freezing rain across parts of those regions. pic.twitter.com/T2b9AIHUDl

— National Weather Service (@NWS) January 18, 2020

The storm is so massive, that two-thirds of the U.S. will be under weather advisors on Saturday. Accumulating snow is expected in the Upper Midwest, Great Lakes, and parts of the Northeast through Saturday. Snow totals could range from 6 to 12 inches in some regions. 

A sprawling winter storm will continue to produce blizzard conditions, areas of moderate to heavy snow and freezing rain through Saturday. Check https://t.co/VyWINDBEpn for local impacts. pic.twitter.com/nM24Rd7iT1

— National Weather Service (@NWS) January 18, 2020

“This storm will produce a widespread footprint of heavy snows from the Upper Mississippi Valley, across the Great Lakes, northern N.Y. State into central to the north of New England with snow totals in the 6 to 12 “+ range possible,” NWS wrote.

Snow will end in the Midwest by early afternoon. Minnesota, Michigan, and Northern Iowa could end up with 8 to 12 inches. 

From the Baltimore–Washington metropolitan area to Philadelphia to New York, snow will start in the afternoon and continue throughout the day. By late afternoon/evening, snow is expected to change over to a wintery mix then rain for some regions located on the coast. 

“This will be another tricky forecast for the big cities along the I-95 corridor,” said CNN meteorologist Taylor Ward.

“New York City and Boston will likely see 2 to 4 inches of snow before everything ends as rain Saturday night and early Sunday,” said Ward.

The Baltimore–Washington metropolitan area could see 1 to 3 inches of snow – but a changeover to rain could depress totals. 

Interior portions of the Northeast will see the heaviest snow. Some regions, including update New York and Northern Maine, could see 8 to 12 inches by the overnight hours. 

Chicago O’Hare International Airport, Detroit Metro Airport, Ronald Reagan Washington National Airport, Baltimore/Washington International Thurgood Marshall Airport, and major airports in New York City could see a spike in delays as the storm moves from the Ohio Valley to Northeast by Saturday afternoon.