This week’s SCOTUS rulings takeaway:

This week, the third branch of our federal gov’t, the Supreme Court, ruled to expand marriage rights, and also to expand access to health care subsidies to all Americans, in all states.

The federal gov’t is the issuer of dollars. Everyone else, the nonfederal gov’t (you, me, all households, all businesses, all local & state gov’t), are users of dollars (because we cannot issue dollars). The users of dollars all rightfully function to MAINTAIN prosperity (live within our means, avoid debt, balance our budgets, and be fiscally conservative, for our own specific interests, our special or self interests), but the issuer of dollars rightfully functions to WIDEN it (for the general interest, or the common cause).

Lift-off Will Be A One-off

A quick word about the Fed and the soon to be announced ‘rate rise’ of their short term target (from 0% floor / 0.25% ceiling increased to 0.25% floor / 0.50% ceiling) : Because everyone keeps referring to this as ‘the Fed raising rates’ on a daily basis over and over, my guess is that most people are confusing this initial ‘liftoff’ with starting something new instead of ending something old…Keep in mind, there’s a big difference between ending a zero interest rate policy (to contain the credit crisis) and starting a new tightening policy (to contain the economy), so better to just think of the ‘Liftoff’ as more like a ‘Liftout’ that finally turns the page on the credit crisis. The Fed will not wait much longer to finally end ‘ZIRP’, but will hold off for a long while before starting to actually ‘raise rates’ towards ‘normalization’. As per Chair Yellen, “It will be several years before the federal funds rate is back to its normal, longer-run level”. (I predict a July 29th lift-off). 

eddie D