Here at Chez Schuler December 25 is divided into two pieces. In the morning we celebrate Christmas; in the evening my birthday.

It was a very garden-y Christmas for me this year. I received seeds for exotic hybrids and gear for planting them. I’ll post more about the source of the exotic hybrids and gear when I have some experience with them.

Some of the things for which I received seeds (or IOUs for seedlings) were for things I’ve never grown before: squash and potatoes. It will be an adventure. Fortunately, there’s this thing called “the Internet” and I’ll be using it to research the care and feeding of squash and potatoes for the next several weeks or months.

We haven’t celebrated my birthday yet. My wife always makes me a birthday cake. We’ve settled on a recipe that we love. She made the cake yesterday and it looks lovely. I don’t believe I’ve posted the recipe we use. Maybe I’ll do that in a day or so.

Merry Christmas and Happy Holidays to my readers, friends, and family! May your holidays be joyous and restoring.

Update

No Christmas tree this year so no picture. Or, more precisely, we have two Christmas trees: one artificial tree we bought some time ago in the hearth room at the back of the house and an Advent tree in our front window that was coopted into a small Christmas tree. We thought that Jack might not have been tree-friendly.

Scott Grannis pretty clearly thinks that the Federal Reserve Open Market Committee has worn out its welcome:

When all is said and done, the Fed has but one job: to keep the demand for money in line with the supply of money. When the supply of money exceeds the demand for it, inflation is the result, as Milton Friedman taught us long ago and which the experience of the past several years shows us. (I should add that, according to their official mandate, the Fed is also charged with maintaining full employment, but we’ll put that aside, especially since they now hint that they won’t feel comfortable until they see the economy weaken significantly.)

Beginning early last year, the demand for money fell even as the supply of money (best measured by M2) continued to rise. It’s no wonder that inflation rose. In fact, rising inflation confirmed that the demand for money was failing to keep pace with the supply of money. But beginning about 6-8 months ago, when (not coincidentally) the Fed started to raise interest rates, inflation started to decline. This, we know now, was early evidence that the demand for money stopped falling, while at the same time the M2 money supply started shrinking. My recommendation to the Fed, therefore, has been to give the economy time to adjust—they had done plenty enough.

concluding:

Does the Fed really want to crush the housing market by hiking rates further? I think they will come to their senses pretty quickly and back off of their recently-announced tightening pledge. The demand for money is soaring and that means inflation will continue to decline. Nobody needs higher rates right now.

IMO the Federal Reserve governors are making a powerful argument they should be replaced by robots. Consider this graph (sampled from this FRED blog post):

That’s an imperfect indicator of what would have happened, of course, since it doesn’t take into account the effects of action. But notice in particular the period from 2000 onwards. Had the Taylor Rule been followed the fed funds rate would have been adjusted earlier and in all likelihood we would have been saved from the misery created by the Fed’s tardiness.

I think that’s pretty clear evidence that the decision not to adhere to the Taylor Rule is a political one rather than a technical one. Is anyone else bothered by technocrats being enlisted to make political judgments?

I wanted to remark on Ukrainian President Zelenskyy’s visit to Washington and address to a joint session of Congress. I think he had multiple objectives. The first, of course, was to refocus the West’s and particularly the United States’s attention on the war in Ukraine. There had been some signs of flagging support.

I think he also wanted attention. Take it from someone who comes from a family of professional entertainers: a desire for attention is part of the package. He got it. He’s a world figure. Name two other Ukrainian presidents.

I don’t know what’s going to happen in Ukraine and I honestly don’t know how anyone else can, either. Practically everything we hear is propaganda from one side or another. The United States will supply more arms to Ukraine. Since those are produced primarily in the U. S., giving Ukraine arms also functions as a sort of backdoor subsidy to the manufacturing companies.

This is actually very good news. The Pentagon and State Department are doing what they can to verify both sides of the Ukraine aid equation, reports Joe Gould at DefenseNews:

WASHINGTON ― With Congress on track to hit $100 billion in aid this year to help Ukraine repel Russia, the Pentagon’s law enforcement agency is watching for signs of fraud and abuse in the contracts being awarded.

The Defense Criminal Investigative Service’s Ukraine focus is on the Pentagon’s many speedy contracting actions and on the potential black market diversion of U.S. aid, said James Ives, principal deputy director for DCIS, which falls under the Department of Defense Office of Inspector General. No contracting fraud has become public so far.

“The risk is very real by virtue of the fact that we’re dealing with such an incredible volume of items, many that have warfighting capabilities, and we’re doing it very quickly,” Ives said in an interview. “Any time where you see accelerated efforts of this nature, there’s potential for all sorts of activities that should be of concern.”

There’s a side to the equation other than the procurement side and they’re taking care to look after that as well:

In an effort to head off criminal exploitation in activities related to Ukraine assistance, Ives in September led a team of DCIS investigators on a trip to Poland, a hub for the transfer of foreign military equipment and supplies to the Ukrainian government. The visit was meant to spread the word that fraud, abuse and diversions should be reported.

“A good deal of our efforts right now are making sure we’re out and about, letting folks know that when these facts come to the government’s attention, investigative agencies need to get involved,” Ives said. “It’s an effort to remind folks that although we understand there’s a need to engage in this accelerated procurement that’s going on, there’s a need to bake oversight into the process.”

Potential reports could come from the Pentagon workforce, which Ives called the inspector general’s “eyes and ears on the ground,” as well as senior leaders. Meanwhile, he said, investigators received assurances from the Ukrainian government that its officials take potential weapons diversion seriously and, along with the U.S. State Department and military officials, will report any instances to the watchdog agency.

“They fully understand that accountability is expected,” Ives said of Ukrainian officials. “They obviously have a vested interest in ensuring they have the correct processes in place … and they’re certainly aware that any issues need to be brought to the [U.S.] government’s attention.”

Ives said DCIS coordinates with the State Department and other U.S. law enforcement agencies, and it also maintains “a really strong network of international partners within the law enforcement community.”

While the Defense and State departments said they haven’t found credible evidence of diversion of U.S.-provided weapons, both say they are taking steps to safeguard those weapons.

Small teams with the defense attache office within the U.S. Embassy in Ukraine have conducted inspections, which include keeping records of aid before it’s handed over and then tracking it from border logistics hubs to the front line, a senior defense official told reporters in October. The Defense Department is also training Ukrainians to provide data from areas where U.S. teams cannot go.

Still, I can’t help but wonder who watches the watchers? It wouldn’t take a lot of corrupt inspectors to result in major diversions of materiel. Not only do we need to ensure that they reach their intended recipients, we need to take steps that they aren’t used against us in some future action.

The piece concludes:

“High-value, accelerated contracting can lead to significant fraud, waste and abuse, and oversight is absolutely paramount when it comes to these types of situations,” Ives said. “We certainly saw in Afghanistan and Iraq that some of the most significant fraud schemes we’ve ever seen came in the early stages of those engagements, where oversight wasn’t a prime consideration. That lesson, I believe, has been learned.”

$100 billion here and $100 billion there and pretty soon you’re talking about real money. With such a volume and such a velocity, considerable care needs to be taken to avoid fraud.

As of today China is reporting 3,101 new cases of COVID-19 while Hong Kong is reporting 16,953 new cases. South Korea reports 88,172 new cases and Japan 206,943.

Let’s consider the possibilities.

1. China’s “Zero Covid” policy has been tremendously successful.
2. China isn’t reporting the full extent of the disease.

Both could be true. Am I missing any possibilities?

Update

From France24:

In Chongqing — a city of 30 million where authorities this week urged people with mild Covid symptoms to go to work — one worker told AFP their crematorium had run out of space to keep bodies.

“The number of bodies picked up in recent days is many times more than previously,” a staffer who did not give their name said.

“We are very busy, there is no more cold storage space for bodies,” they added.

“We are not sure (if it’s related to Covid), you need to ask the leaders in charge.”

In the southern megapolis of Guangzhou, an employee at one crematorium in Zengcheng district told AFP they were cremating more than 30 bodies a day.

“We have bodies assigned to us from other districts. There’s no other option,” the employee said.

Another crematorium in the city said they were also “extremely busy”.

“It’s three or four times busier than in previous years, we are cremating over 40 bodies per day when before it was only a dozen or so,” a staffer said.

“The whole of Guangzhou is like this,” they added, stressing that it was “hard to say” whether the surge in bodies was linked to Covid.

In the northeastern city of Shenyang, a staff member at a funeral services business said the bodies of the deceased were being left unburied for up to five days because crematoriums are “absolutely packed”.

Asked by AFP whether the rise in demand was due to Covid, he said: “What do you think? I’ve never known a year like this one.”

That constitutes a little anecdotal evidence for B. Additionally, it’s possible that the lockdowns themselves are partially to blame. As we are learning here an unforeseen secondary effect of lockdowns appears to be reduced resistance to other diseases.

In discussing the Federal Reserve’s plan to control inflation, comparison is nearly always made between today and Paul Volcker’s successful strangling of inflation in the early 1980s. I’ve been mulling this over and I’m beginning to wonder if the comparison is really warranted. Consider:

It has been demonstrated empirically that the higher the national debt, the slower GDP growth. It used to be thought that there was a sort of “cliff” at 100% but that is now known to be untrue but the inverse relationship between debt and GDP continues to hold true.

There are presently differences of opinion on whether we are in a recession or not and whether the Federal Reserve can engineer a “soft landing” (a gradual slowing in growth). It seems to me that the tremendous differences in our fiscal situation now as opposed to 40 years ago must certainly figure in the discussions

I found this piece by Alastair Crooke at Strategic Culture Foundation concerning:

The inflection has begun. It has been messaged by the Financial Times (FT) and The Economist – the two media that so faithfully transmit any ‘replacement narrative’ to the globalist sherpas (those who carry the baggage up the mountain, on behalf of the mounted nabobs).

The Economist leads with interviews with Zelensky, General Zaluzhny and Ukraine’s military field commander, General Syrsky. All three are interviewed – interviewed in The Economist, no less. Such a thing does not occur by happenstance. It is messaging intended to convey the Ruling Class’ new narrative to the ‘golden billion’ (who will all read and absorb it).

On the surface, it is possible to read The Economist piece as a plea for more money and many more weapons. But the underlying messaging is clear: “Anyone who underestimates Russia is heading for defeat”. The Russian force mobilisation was a success; there is no problem with Russian morale; and Russia is preparing a huge winter offensive that will start soon. Russia has huge reserve forces (of up to 1.2 million men); whereas Ukraine now has 200,000 who are militarily trained for conflict. The ‘writing is on the wall’, in other words. Ukraine cannot win.

It is appended with a huge shopping list of sought-after weapons. But the shopping list is ‘pie in the sky’; the West simply does not have them in inventory. Period.

The FT’s ‘Big Read’, by contrast, is a venting of deep western anger at those Russian ‘reformist’ siloviki technocrats who, instead of breaking with Putin over the SMO, instead shamefully enabled the Russian economy to survive western sanctions. The message uttered – through clenched teeth – is that Russia’s economy has successfully survived western sanctions.

It continues.

I have further questions. What was the objective of the those interviewed? In negotiating theory there are several prices: the asking price and the selling price are two that come to mind. But there is also something called the “insult price”—terms so outrageous they are intended to end negotiations. The Ukrainians must surely know the West does and does not have and that there are limits to what it can offer. Was the “shopping list” an insult price?

I also can’t help but wonder if they’re looking around for someone to blame for an emerging defeat and we’re nominated.

I also wonder what The Economist’s and Financial Times’s objectives were. Sometimes a cigar is just a cigar. But sometimes it’s a phallic symbol.

The House’s January 6 committee has completed its work, making a criminal referral on several charges to the Attorney General. The editors of the Washington Post declaim:

This criminal referral is symbolic; the Justice Department is responsible for making a tough call on whether such charges would stick — and whether it would be prudent to indict a former president and current presidential candidate.

The committee has secured its legacy in different ways, providing a searing picture of what occurred on Jan. 6, 2021, and exhibiting the cowardice of those who, out of fear of Mr. Trump, refused to help it reckon with that dark day.

The public now knows much more about Mr. Trump’s culpability. New details, including videotaped testimony from former Trump aides, showed Mr. Trump had been told he’d lost the election but nevertheless leaned on state officials, the Justice Department, his vice president and others to keep him in power — a campaign that resulted in the Jan. 6, 2021, riot.

The editors of the Wall Street Journal remark:

The House Jan. 6 committee decided Monday that the best way to cap its 18 months of work would be a political gesture. It thus referred President Trump to the Justice Department for potential criminal prosecution for his efforts to reverse the 2020 election, which culminated in the Capitol riot.

What is this supposed to accomplish? A Congressional referral to the Justice Department has all the legal force of an interoffice memo. Attorney General Merrick Garland has appointed special counsel Jack Smith to investigate Mr. Trump’s schemes to stay in office. The Jan. 6 committee’s loud public intervention makes his job more complicated, given the clear partisan context.

The House Jan. 6 inquiry has done useful work gathering documents and putting witnesses under oath. The wiser course was to let the established facts speak for themselves, while releasing full transcripts of its interviews to provide a complete public record.

concluding:

Jan. 6 was a disgrace, and Mr. Trump’s behavior on that day and since is a reason not to trust him with the Presidency ever again. But Justice must balance a decision to indict Mr. Trump with the risk of setting a momentous precedent: prosecuting a former President running against a current President.

The proof to support such a charge would have to be undeniable, with a legal theory straightforward enough to convince most of the country, including most Republicans. Otherwise it could cleave the country in two, and it might even help Mr. Trump in rallying supporters to his defense. Indicting a former President would also take the scourge of criminalizing political differences to new heights. Democrats would surely be future targets.

I think the Department of Justice would be prudent to demur from indicting President Trump. Since the events of January 6, 2020 I have maintained that President Trump should be prosecuted to the full extent of the law but that many would be disappointed at how limited that extent is. IMO we need a constitutional amendment to address this particular set of facts. There are both common law and case law arguments that a president cannot be charged with crimes for actions taken while in office. There are also separation of powers arguments. Consider, too, that the Department of Justice is subordinate to the president. A sitting president indicting his predecessor for crimes in office will open a Pandora’s box of problems we might well wish to avoid. Gerald Ford saved us from that eventuality in the aftermath of the Watergate incident and it probably cost him re-election. I doubt that any future president will escape being indicted for something if he should happen to be succeeded by a president of a different party.

In an op-ed in the Washington Post Lawrence Summers gives his advice to the Federal Reserve:

What should the Fed do next? The choices from here get harder, not easier, as both the risk of a severe recession and enduring inflation make policymaking more challenging. Chair Jerome H. Powell was right in his Dec. 14 news conference to emphasize that there is no basis for confident economic prediction.

and

It is very unlikely that we will have a recession so severe as to drive the underlying inflation rate below the 2 percent target. Hence, overshooting on inflation reduction is not the primary risk, and the Fed is right to emphasize its inflation objective going forward.

However

Fiscal policy will need to respond if and when recession comes. There will not be room for massive, across-the-board efforts. But now is the time to put in place carefully targeted measures to refund child tax credits, strengthen unemployment insurance and be ready to pull forward federal spending on maintenance and replacement cycles to periods when overall demand is soft.

The challenge in that is that any additional spending fueled by borrowing (“printing money”) will aggravate the present situation which, simply stated, is that too many dollars are chasing too few goods and services. My own view is that we need to produce more of what we consume and that’s where the White House’s focus should be. Since I don’t believe that’s politically possible and would be very unpopular within the president’s own caucus to boot, I don’t think it will happen.

What I do think will happen is that fiscal policy and monetary policy will be at cross-purposes.