How the Fed Finances U.S. Debt.

 Wall St Journal op-ed last Thursday.  Written by Judy Shelton.

Strange article.  Never mentioned US bonds (T-bills).  First it talks about a silly plan to mint a $1 Trillion dollar platinum coin, deposit it in the Federal Reserve, and claim we are solvent.  Even if such a toy were 6 feet across, it would not be worth a TRILLION dollars.  Plus, the Fed can print all the plain old dollar bills that might be needed to redeem T-bills as they come due. 

   Then we have a strange quote from Janet Yellen.  “[It] (the platinum coin thing) is equivalent to asking the Federal Reserve to print money to cover deficits that Congress is unwilling to cover by issuing debt. It compromises the independence of the Fed, conflating monetary and fiscal policy.” 

   Wow!  I, and everyone else in America, expects the Fed to prevent a default on our T-bills by any means possible, selling more T-bills if Congress raises the debt limit, or just printing more Benjamins.  The inflationary effect of selling T-bills is about the same as for printing Benjamins.  T-bills are “near money” according to my old college economics text (Samuelson).  They are nearly as good as cash; investors who pay cash for them know that they can turn their T-bills back into cash any business day.  We run a bond market open 5 days a week, and you can sell your T-bills anytime you please and receive a cash payment within a couple of business days.

  Interesting factoid, The Fed gives the interest it earns on various things it bought to the Treasury.  This was $87 billion last year.  A nice chunk of change. 

  There are more words in the piece, but they are things everyone knows. 

Eaves vs gutter screens

 The TV has been heavily advertising gutter screens, pieces of perforated metal that fit on the top of the gutters, and let the rain water in and block out the leaves.  Cool.  Of course my house does not have gutters at all, so I don't need gutter screens.  I have nice big deep eaves, so the rain water that runs off my roof falls at a decent distance from the house and does not cause my any trouble.  

   The other benefit of good deep eaves is heating and cooling of the house.  My eaves allow the sun to shine in my south facing windows in the winter, and they block the sun in the summer to keep the house cool.  I think every house ought to have good deep eaves. 

A Couple of more good bright trees up in Franconia Notch.

 

 

 

Welfare for lawyers.

 Eight years ago the Tsaernov brothers bombed the Boston Marathon.  They killed three people, injured better than 100 people, including 16 people who lost limbs from the bombing.  The older brother was killed by police during his arrest, the younger brother ,Dzhokhar Tsarnaev, was arrested, alive, and given a trial.  The jury found him guilty and condemned him to death.  That was 8 years ago.  For the next 8 years lawyers have been collecting fees to rehash the case.  Today they got their arguments to the US Supreme Court.  How much longer lawyers will be able to collect fees from this case is unknown.  The crime was murder, which is an offense tried and punished by the states.  It is not a federal crime.  Why the Supremes are messing with a state crime and a state court sentence of death, is unclear.  Justice delayed is justice denied. 

Covid Vaccine Mandates Unnecessary

 I got vaccinated back in February and March of this year.  Since then something like 250 million shots have been administered in this country.  Less than 10,000 adverse reactions have occurred.  That is a success rate of 99.996 %.  Success doesn't get much better than that.  Very few cases of covid have occured in vaccinated people.  So I believe the covid vaccination is safe and effective.  I got vaccinated, and I will ask my doctor about getting a booster shot when I see him later this week.  I'll do what ever he recommends.  

  There are a number of people who don't want to get vaccinated.  I think they are wrong headed, but hey it's a free country (at least it used to be). If people don't want to get vaccinated I don't think we ought to be forcing them by firing them from their jobs and not allowing them into stores and restaurants and what ever.  They can walk around, spreading covid, I'm vaccinated so they won't give it to me.  If you are worried about them giving covid to you, go get vaccinated, that works, it's free. 

Tucker Carlson was saying that the humongous flight cancellations on Southwest Airlines  over this Columbus day weekend is caused by workers and flight crew who don't want to get vaccinated taking sick days and staying home.  These highly trained people are impossible to replace.  We would do better if we dropped this vaccine mandate stuff. 

Infrastructure should be a state and local business.

 Infrastructure is roads and bridges and dams and airports and flood control.  This stuff only helps the residents of the states in which it gets built.  I think such projects should be locally funded.  He who spends the money should raise the money.  This tends to keep the spending down.  If the feds just hand cash to the states, the states will make sure that they spend it all whether they need it or not.  Use it or loose it. 

   Congress is debating a one and a skosh TRILLION dollar infrastructure bill right now.  A good chunk of this is the federal highway trust fund, financed by the federal gasoline tax.  It was created back in the Eisenhower administration to build the interstate highway system.  They finished that job 40 years ago.  But they have kept right on spending year after year.  We could shut down the federal highway trust fund, and shut down the federal gasoline tax.  And tell the states that they can do any road building they deem necessary and they can raise the state gasoline tax to pay for it.  Want to bet that spending would go down now that the states would have to raise the money to pay for frills like the Boston big dig?

   I think the country would be well served to get the feds out of the infrastructure business.  The states will do a better job.

 

 

Compression Ratio. What is it? How high is enough?

   Gasoline engines (car engines) work by igniting a flammable fuel air (gasoline air) mixture when the piston is at top dead center. The heat of the burning fuel creates a high pressure in the cylinder and that pressure forces the piston down.  Heat energy (from the fuel burn) is converted into mechanical energy to turn the wheels of the car.  As long as the piston can travel down, heat energy gets converted into mechanical energy.  Unfortunately, in real practical engines, the piston reaches bottom dead center, after a travel in the order of four inches.  At bottom dead center the exhaust valve opens and the burning mixture, still very hot, is wasted to the atmosphere.  If we could build engines where the piston could keep going down, for maybe 10 feet, we could get a lot more work out of the fuel we burn.  Unfortunately such an engine would never fit under the hood, or even inside the length of a car. 

   It was found that the measure of engine efficiency is the ratio of the volume of the combustion chamber and top dead center, to the volume of the entire cylinder at bottom dead center.  You can raise the compression ratio by making the combustion chamber really really small, and living with the four something inch stroke of the typical engine. 

   In gasoline engines something else limits the possible compression ratios.  The piston compresses a flammable mixture of fuel and air. Compressing a gas (a fuel air mixture) heats it.  Sooner or later the mixture will spontaneously burst into flame.  The mixture burning on the compression stroke is called knocking in automotive circles.  Most of us have heard the noise, a kind of banging, when lugging up a hill, rpms too low, load too high.  Knocking is more easily heard on standard shift cars.  Slush box cars are programmed to down shift, get the rpms up, and avoid knocking.  The onset of knocking depends upon the grade of the gasoline.  80 octane regular gasoline is about as low as we go in the United States and will not allow a compression ratio higher than 8:1.  100 octane high test is quite knock resistant and can support a compression ratio as high as 13:1, beloved of car racers. 

 In recent years the advent of microprocessors in cars has allowed compression ratios as high as 10:1 to run on 80 octane regular gas.   The microprocessor detects the onset of knock and adjusts the ignition timing to control the knocking. 

   The greenies have been working hard to reduce car fuel efficiency.  They believe that car exhaust emissions of various nitrogen oxides are the cause of LA smog, and they have written regulations to reduce nitrogen oxide emissions.  Nitrogen oxides are formed whenever air is heated to extreme temperatures.  High compression ratios yield extreme temperatures as well as high fuel efficiencies.  To pass the greenies nitrogen oxide limits most car makers are reducing compression ratios and taking the hit to fuel economy. 

   In actual fact, nitrogen oxides all wash down in the rain, all nitrates are soluble.  And nitrogen oxides are good for plants; the botanists call the stuff fixed nitrogen.   When you buy fertilizer for your lawn you are buying nitrogen oxides. 

   LA smog happens when nitrogen oxides react with oily vapors from spilled fuel, loose gas caps, and worn engines that burn oil.  We could reduce smog by clamping down on oily vapor emissions and permit car engines to run high compression ratios to get good gas mileage.