Commentary for week ending 10/02/2021
News from the “puzzle palace” (otherwise known as Washington, DC):
- Senator Elizabeth Warren calls the Chairman of the Federal Reserve “dangerous”. Really? Jay Powell may be too dovish for my tastes, but he is a fine man and I would hardly call him “dangerous”. Senator Warren should apologize for her level of invective.
- Congress is still struggling to pass the infrastructure bill. As I previously stated, we need to improve our roads, bridges, airports, broadband, etc. But the 3.5 trillion dollar Democrat “wish list” is a bridge too far.
- The administration wants banks to report transaction information on any account with more $600 to the IRS. This is completely absurd and is an an unfair burden on small banks and businesses. More importantly, the effect on tax compliance seems questionable. I was talking to a friend in the IT department of a major bank and he was happy about this one. Why? Because it means virtual permanent employment for him as he would need to design, code, and debug thousands of lines of code to support this stupid requirement! Here is more information: ABA Letter to Senate Finance and House Ways and Means Committees: Views on Tax Information Reporting Proposal | American Bankers Association
- Congress wants to virtually close IRA investing to high earners (glad I already built mine). See this: Why Is Everyone Talking About the Mega Backdoor Roth IRA? | The Motley Fool
- The talks on the debt limit are patently ridiculous, since we those funds have already been appropriated and spent. It is similar to an individual buying goods and services on their credit card and then refusing to pay. If there is a “debt limit”, it should be done before the money is spent, not after! Seems obvious, doesn’t it? But not in the “puzzle palace” (oh, sorry, Washington, DC!).
On the market in general, I think we are in for some more trouble. Limited supply of both goods (particularly chips) and service (i.e. workers) are putting us on the road to more inflation. Anyone who has taken a beginning economics class will recognize a supply/demand curve imbalance that will only reach equilibrium with price increases.