And debt forgiveness was Biden's plan

Ten days ago I was writing this for the blog:

Economic Policy: A Plan for Democrats

Dems should support debt forgiveness for consumers, with limits to prevent abuse by the wealthy. A whole policy strategy can be built around this theme. That's something the Dems need

President Biden's plan was to forgive student debt. Republicans undermined Biden's plan at every turn. The Republicans don't like the idea of debt forgiveness. They will gladly line up against it. A clear path is open for Democrats.

That's as far as I got. Then I forgot about it and went on to other things. No problem; I'd have found it eventually. But now I find this:

Whoa! Have I been getting Trump all wrong? Can it be?

The Newsweek article (dated 20 Oct 2025) says

The Trump administration has confirmed its agreement to cancel student loan debt for eligible borrowers under certain plans, following a legal agreement between the American Federation of Teachers (AFT) and the Department of Education.
...
The latest decision marks a major policy pivot for the Trump administration, which previously paused or restricted student debt relief through federal income-driven repayment programs. 

Newsweek lays out the backstory:

• Trump halted "Income-Based Repayment" debt forgiveness earlier this year.
• In March 2025, the American Federation of Teachers (AFT) sued the administration.
• Newsweek says "The recent legal settlement, filed on October 17, between the Department of Education and AFT confirms that the administration will now resume loan cancellations" for the affected plans.

"The Department of Education," according to the Newsweek article, "said most loan discharges will be processed within two weeks after October 21." For the next two weeks, then, debt forgiveness should be in the news. If it isn't, you might want to make some noise about it.

Is it a big debt-forgiveness plan?

The Newsweek title reads "Student Loan Forgiveness Update: Trump Admin Cancels Debt For Millions". Sounds good. But in the article they say as many as "2 to 2.5 million borrowers". So yes, it is millions -- plural -- but it's not plural by much.

Joe Biden's Fact Sheet of August 24, 2022 has the number of student loan borrowers at 45 million. Google has the number today at 42.5 million for federal student loans. Either way, helping 2.5 million people get out of debt helps less than 6 percent of those with student debt. Less than 6 percent. That will do little or nothing to boost our economy, which is mired in all kinds of debt.

Why We Need Debt Forgiveness

In the Newsweek article, under "What people are saying" they report: 

AFT President Randi Weingarten said in a statement: "For nearly a decade, the AFT has fought for the rights of student loan borrowers to be freed from the shackles of unjust debt—and today, a huge part of that affordability fight was vindicated. 

and: 

Winston Berkman-Breen, Protect Borrowers legal director said in a statement: “This is a tremendous win for borrowers. With today’s filing, borrowers can rest a little easier knowing that they won’t be unjustly hit with a tax bill once their student loans are finally canceled, pursuant to federal law... ”

Weingarten is focused on "affordability" for borrowers. Berkman-Breen sees a "win for borrowers".

Joe Biden's fact sheet from 2022 is titled "President Biden Announces Student Loan Relief for Borrowers Who Need It Most". Biden's plan was to help people cope with the cost of student debt repayment. So is Weingarten's, and so is Berkman-Breen's.

I'm not an economist. I'm a former math major, 76 years old. I've been studying the economy -- not economics --  since 1977. And I have to say that Biden, and Weingarten, and Berkman-Breen are all doing micro-economics. All three are worried about the individual; in this case, about the individual borrowers. Biden wanted to help the people who needed it most. So did Weingarten and Berkman-Breen.

I call for debt forgiveness on a grand scale because that will fix the macro-economy. It will make the economy better for everyone, even for those that had no debt. If we make the economy better, we make it better for everyone. If we only make the economy better for those who need it most, then everyone, even those we are helping, still have to cope with our failing economy.

 

Live Long and Prosper

Google identifies three distinct periods of prosperity in the last 100 years or so: 

• The Roaring 20s, 
• The "golden age" that followed World War Two, and 
• The "New Economy" of the latter 1990s and early 2000s.

Each of those prosperous periods appears as an uptrend in the line on the graph below:

In each case, prosperity begins almost as soon as the line starts showing a persistent increase. In each case also, prosperity comes to an end around the time the persistent increase comes to an end. There is a strong connection between prosperity and the data shown on the graph. 

The graph shows the amount of private debt in the economy, per dollar of public debt. The orange line shows data from the Bicentennial Edition of the Historical Statistics. The blue line uses the FRED data, from the ALFRED archives.

Times of prosperity begin when the private-to-public debt ratio is relatively low. They end when the ratio is relatively high. In other words, times of prosperity do not begin until the ratio is low enough, and do not end until the ratio is getting too high.

Prosperity begins when the ratio is low. But other conditions also vary, so prosperity may begin at a higher low or a lower low.

Prosperity ends when the ratio is high. But again, other conditions vary, and this affects the level at which prosperity fails. 

Two times out of three, on the graph above, the prosperity ended painfully: once with the Great Depression, and once with the Great Recession. Something to keep in mind.

 

Times of prosperity are times when private-sector debt is growing faster than public-sector debt. That is what makes the line go up. This makes sense, I think, because a vigorous private sector is the source of prosperity.

We can think of the graph as showing a prosperity cycle: like the business cycle, but longer. Times of prosperity are like times of growth. Times without prosperity are like times of recession. Our time is such a time. In such times, public debt grows faster than private debt.

It is necessary, I believe, to have times when public debt grows faster than private. Only in such times does the line on the graph fall to a low point where prosperity can resume. This is why our efforts to reduce federal spending and balance federal budgets have been failing since the 1970s: As the graph shows, public debt must increase more rapidly than private debt to bring the line down, so that prosperity can resume. Unfortunately, we have been trying for years to create prosperity by slowing the growth of public debt. As the graph shows, our efforts were doomed to fail.

Most people and most economists, I think, see cutting government spending and debt as the way to fix our economy. Some economists, and maybe a few other people, see expanding government spending and debt as the way to fix it. Both groups need to focus not on government data alone, but on the ratio of private-to-public.

We need to get the ratio low enough to kick-start prosperity. Cutting government spending and debt makes the ratio higher. That is the wrong solution.

Increasing government spending and debt will make the ratio lower, which is what we need. But we have been trying to do that for 50 years with very little success. The only prosperity we had since the 1970s came in the latter 1990s. And yes, federal deficits got smaller in those years.  But the smaller deficits were more the result than the cause of that prosperity.

Because of the Savings & Loan Crisis (1985-1995), private debt grew slowly. Slow private debt growth worked the way rapid public debt growth would, causing an decrease in the private-to-public ratio. It was several years of slow growth of private sector debt that pushed the private-to-public ratio down enough to permit the rise of prosperity.

One last point.

Three bullet points in a BusinessInsider article at MSN: "New student-loan forgiveness under Trump is coming. Here's what borrowers should know." 

• The Trump administration said it is processing student-loan forgiveness for some borrowers on income-based repayment.
• Eligible borrowers received emails stating that they are expected to receive relief in the coming months.
• The ongoing government shutdown could cause delays.

The timeline is now months plus delays. 

Hume on the arbitrary power of tyrannical government

The excerpt below is from FEE, the Foundation for Economic Education, from "David Hume Believed in the Miracle of Commerce" by Richard M. Ebeling. My remarks appear on the white background.

The FEE Excerpt		My Response

David Hume emphasized that commerce and trade were among the most important avenues to offer opportunities to raise people’s standards of living, and to bring refinement and cultural betterment to a growing portion of a nation’s population.

I accept Hume's view that commerce and trade did offer good opportunities for people to improve their living standards in the 1750s when he wrote about it. There are still opportunities today.

Commerce also served as an important leveler of the material inequality of a society based on political privilege and government-bestowed monopoly. Through trade, a wider variety and quality of goods became available to a growing number of the people in any society, fostering the development of a “middle class.”

I do not dispute Hume's view that commerce played a powerful role in reducing inequality in the 1750s and for many decades thereafter. But the US middle class has been shrinking for half a century now.

At the same time, growing wealth among more and more members of society acted as a means to restrain and weaken the arbitrary power of tyrannical governments, as a larger percentage of the population had the means to free themselves from government dependency and control...

The growth and distribution of wealth helped to keep the arbitrary power of tyrannical governments at bay for generations. But in our time, failing growth and the concentration of wealth have encouraged tyranny and the abuse of power.

... government dependency and control. Or as Hume expressed it in his essay, “Of the Refinement in the Arts”:

“But where luxury nourishes commerce and industry, the peasants, by a proper cultivation of the land, become rich and independent; while the tradesmen and merchants acquire a share of the property, and draw authority and consideration to that middling rank of men, who are the best and firmest basis of public liberty.

The decline of the middle class -- the middling rank, Hume says -- brings with it the decline of "the best and firmest basis of public liberty."

“These submit not to slavery, like the peasants, from poverty and meanness of spirit; and having no hopes of tyrannizing over others, like the barons, they are not tempted, for the sake of that gratification, to submit to the tyranny of their sovereign. They covet equal laws, which may secure their property, and preserve them from monarchical, as well as aristocratical tyranny.”

That is the best paragraph in the excerpt. The best in the post. And Hume wrote it about us: the middle class, and those who want to take back our place in the middle class.

Governments and special interest groups, Hume feared, are always want to use and abuse political authority and influence to gain much for themselves at the expense of the ordinary, or common, members of society. And as a society grows in wealth there is more for the government to siphon off through taxes for its own purposes and for interested groups to use the state to plunder and manipulate. But with the emergence of a middle class that is increasingly supporting itself through commerce and industry, they have the financial means to resist these encroachments by the state. Or as Hume said in his essay “Of Commerce”: “So the luxury of the individuals must diminish the force, and check the ambition of the sovereign.”

Hume, quoted by Keynes

“It is of no manner of consequence, with regard to the domestic happiness of a state, whether money be in a greater or less quantity. The good policy of the magistrate consists only in keeping it, if possible, still increasing; because by that means he keeps alive a spirit of industry in the nation, and increases the state of labour in which consists all real power and riches.” (Essay On Money, 1752).

From a footnote in Chapter 23 of The General Theory

Graph #1: The Quantity of Transaction money per Dollar's Worth of Output
The low before the Great Recession runs from 2004 to 2009.

 

Graph from mine of November 28, 2024.

Last Chapter, First Sentence

The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.

J. M. Keynes, 1936

I HATE Windows 11

 Change for the sake of change. And more advertising of microsoft products every time I load a page.

I had to walk up the escalator once or twice in my life

It's not such a problem, really. It's like walking up stairs.

Economic decline

The phrase "economic decline" occurs increasingly in Google Books from the early 1970s to the early 1990s. These dates match two decades of low productivity of the US economy.

Usage of the phrase declines from the early 1990s to 2008, the period that contains the high-productivity "new economy" Greenspan talked about. That period that ended with the financial crisis.

Usage of the phrase increases from 2008 to 2015 -- a good match to the years the Fed held interest rates at zero. Things were improving at a snail's pace, give or take.

After 2015, things were improving enough you could see improvement. Trump took credit for that improvement -- and he still does, today. I credit the decline of private-sector debt.

"The world's wanker"

For "wanker" read "banker". 

The four short fragments below are from "Today Is Our Dependence Day" (Aug 26, 2025) by Maia Mindel at Some Unpleasant Arithmetic, on Substack.

The topic is foreign exchange, trade deficits, and US economic policy. Mindel writes:

"But the US [dollar] isn’t just any currency. It’s the global reserve currency. This means, basically, that the US has to export a lot of services like lending currency to other countries, at the expense of having an artificially strong dollar..."

"The way the system works is that everyone agrees to give the United States free stuff in exchange for financial assets, and in return the Ameriburgers act as a mix of banker, venture capitalist, insurance company, and central banker, which borrows short-term in safe dollars to invest long-term in risky ventures worldwide, and provides safe assets to other countries during global crises. This dynamic is the bedrock of the global economy, but its stability is entirely contingent on one thing: the credibility of the United States."

"To retain its global economic hegemony, the US must stay a reliable and well-run country. Its number one responsibility is to provide an unlimited supply of truly safe assets that every single other country in the world can depend on."

"The consequence of a crisis of confidence against America would be total global economic bedlam. Fearful investors would dump U.S. assets, sucking liquidity out of the American economy and wrecking all global currencies as they tried to [find] somewhere to park. The last time the global hegemon failed so badly was in 1929."

It'll be worse, this time. 

Roger Farmer on tariffs and the trade deficit

 

Tariffs and the Trade Deficit
June 28, 2025

https://www.rogerfarmer.com/rogerfarmerblog/2025/6/28/tariffs-and-the-trade-deficit 

The Fed says 2 percent. The economy says 3 point 3

Inflation targets before and after the so-called Biden inflation:

Find the FRED Graph at https://fred.stlouisfed.org/graph/?g=1oTwm

The graph is from mine of June 15, 2024.

Eleven in favor, one against

Yesterday morning, before the FOMC met to pick an interest rate, from The Hill:

Trump’s pressure on Powell to lower rates comes to a head
Wednesday, 17 Sept 2025, 6:00 AM

"Trump has sought to reshape the Federal Reserve, pushing to remove board of governors member Lisa Cook and tapping White House economic adviser Stephen Miran to fill a vacancy.
...
Wall Street is fully expecting a rate cut, which is expected to be announced Wednesday afternoon. Futures markets were pricing in a quarter-point cut with a 96 percent probability on Monday afternoon, with a 4 percent chance of a larger, half-point cut."

 

Yesterday, after the meeting, from Reuters:

No big push for a larger rate cut, Fed's Powell says
17 Sept 2025, 2:49 PM

"There wasn't widespread support at all for a 50 basis point cut today," Powell told reporters at a press conference following the Fed's two-day meeting.

"You know ... we've done very large rate hikes and very large rate cuts in the last five years, and you tend to do those at a time when you feel that policy is out of place and needs to move quickly to a new place."

 

And this, from the Fed's Press Release after the meeting:

September 17, 2025
For release at 2:00 p.m. EDT 

"Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; Jeffrey R. Schmid; and Christopher J. Waller. Voting against this action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting."

(15Sept2025) Dear Audie Cornish

On CNN This Morning with Audie Cornish, this morning, Audie says she finds lots of people who diagnose the Democrats' problem, and none with solutions. What I have to say is that everyone sees the Dems problem as a political problem. Likewise, everyone sees America's problem as political. 

America's problem is economic decline, long-term economic decline. It is an economic problem. It does not have political solutions. There is an economic solution, which is to significantly reduce the debt of the private sector:

However, most everyone who does focus on econ is focused only on reducing federal debt.

 

A guest on CNN's Audie Cornish show this morning -- Sara somebody -- was saying Democrats don't pick up on how hard it is for people (or young people, Sara might have said) to get jobs. Dems do not focus on the economy at all -- until after any upcoming election, and even then, only briefly. Dems make no economic argument.

The next bit of news I noticed on CNN this morning was that the New York State Governor on 14 September endorsed Mamdani for NYCity mayor -- some 2½ months after the July 1 certification of the vote count. 

The only thing I know about Mamdani is that somebody on CNN (or maybe MSNBC) once referred to him as a commie (or maybe as a socialist). I still remember that, from months ago. Maybe the Governor remembers it, too. A typical Democrat, Governor Hochul hesitated to endorse until the hesitation itself became the news.

Here. I said this before:

I don't know what's going on in their minds. But it looks to me as if Democrats have something like "math anxiety" about economics. Dems seem to think that if they go for sound economic argument, they will necessarily come to the same conclusions as the Republicans.

I don't know how they could possibly think this, as it is based on the flawed premise that Republican economics is sound. Actually, the problem is

This little piggy has bad policy

That little piggy has none

All we need, really, is a few tweaks to policy, and to vote for people who understand that the financial sector is more than big enough already.

Scott Sumner, 16 July 2024

In "Now do you see the problem?" Sumner said

I pay a lot of attention to politics in other countries. I noticed that as the nationalist right gains strength, their views on economics moved sharply to the left, away from free markets. I predicted that this would eventually happen to the GOP.

Economic improvement since 2010

Re-posted from mine of 24 October 2024:

Another look at US economic decline. I started with annual FRED data on Real GDP growth, inspected it, and added two trend lines -- one before the economic disaster of 2008-09 and one after:

The black line shows Real GDP, annual rate of growth. I omit the years before 1950, eliminating data from the Depression and World War Two.

The red trend line is based on the data for 1950-2000 and is displayed for the years 1950-2009.

The blue trend line is based on the data for 2010-2019 and is displayed for 2008-2023.

The 1950-2007 trend is visually indistinguishable from the 1950-2000 trend so I have excluded the years 2001-2007 from the trend calculation.

The 2010-2023 trend, excluding 2020 and 2021, is to my eye indistinguishable from the 2010-2019 trend as far back as the mid-1990s, so I have omitted the years after 2019 from the calculation.

The transition from down-trend to up-trend seems to occur during the Financial Crisis and Great Recession years, 2008-09.

The source data values are annual percentage rates. The trend lines are based on annual percentages. I read the trend values as percentage values.

The red trend runs from 4.326772247 (4.3%) in 1950 to 2.801315234 (2.8%) in 2009. The difference, spread over 59 increments, comes to a 0.026 percentage point trend loss per year or 0.26 per decade.

The blue trend runs from 2.02969697 (2.0%) in 2008 to 2.884242424 (2.9%) in 2023. The difference, spread over 15 increments, comes to a 0.057 percentage point trend gain per year or 0.57 per decade. The uptrend, so far, is rising twice as fast as the downtrend was falling. If it hadn't started from such a low level -- and if we didn't have the covid interruption -- the improvement would be obvious.

Assuming that the transition occurred in 2008-09, we can say that during the one year transition, trend growth fell by 0.7405 (0.74%) or, for comparison, just over 7.4% at the per-decade rate. That one-year trend-transition shock is equal to approximately 28.5 years of the 1950-2000 trend decline.

(untitled)

In the midst of the great depression with the capitalist economies in dire straits, while the totalitarian threats were mounting on both left and right, it was surely exceedingly difficult to maintain a balanced perspective on the «fatal flaw» in the economic system that Keynes thought he had identified.

- Leijonhufvud

Inflation is still reaching for that 3 percent rate

The graph shows inflation (blue) and unemployment (red) from May 2023 thru August 2025. The black line shows the interest rate that the Fed moves up or down to influence inflation and unemployment. The interest rate shows weekly data thru September 3. Next week, at FRED, the interest rate may change.

Inflation (blue), Unemployment (red), and the Interest Rate (black): 2023-05-01 to 2025-09-03
Click the image for a bigger version. Click this text to see the graph at FRED.

At a glance, the red and blue line form an "X" pattern: The red line is trending upward and the blue is trending down. The changes are not big ones, but the red line starts out below the blue line, and ends up above it.

Unemployment (red) shows a trend of increase for almost the whole time the interest rate (black) sits at the high level. We might say that as the interest rate comes down (2024-09 to 2025-01 on the graph) the red line runs flat or tries to go down a little. But after 2025-01, with the interest rate unchanged, unemployment was again rising. This suggests to me that at its current level, the interest rate is too high.

The  Federal Reserve uses a 2 percent target for inflation: They try to keep inflation close to a 2 percent annual rate. 2 percent is at the bottom edge of the plot window on the graph, and on the left-side scale. As the graph shows, the Fed has not been able to bring inflation down to the target level. If they tried harder, unemployment would increase more. I think the Fed is trying to avoid that outcome.

The new BLS data, out today, reports that the CPI "rose 2.9 percent over the last 12 months". Again, almost 3 percent, and still trying to get to 3 percent. This is not the Fed's doing. Not Trump's doing either, I  think, as inflation has been stubbornly refusing to go below 3 percent since July 2023. It is the result of economic forces. That's what I think. The fundamentals of our economy are not really strong. That's what I think. Too much debt: too much private-sector debt. That's what I think.

After the Biden inflation: What Happened?

Feel free to skip the "Context" section below, and jump to the second part of this post.

 

Context 

I looked at inflation back in June of '24 in The Biden Inflation: What Happened? This is the graph I showed at that time:

Graph #1: June 2019 to January 2025

The blue line shows CPI inflation; each blue dot on the line pinpoints one month's data. In the early months of 2021, the path of inflation turns upward and crosses the solid red line. The next blue dot after the lines cross represents March 2021, the month that Jerome Powell warned us inflation was coming.

The gray line shows the Federal Funds Rate, the interest rate that the Federal Reserve raises when they want to fight inflation and lowers when they want to encourage jobs and growth. The Federal Funds Rate runs flat and low, near the zero level, from early 2020 to early 2022. The first increase came in March 2022, a full year after Powell's March 2021 inflation warning.

CPI inflation in March 2022 was 8.5 percent, as the blue line indicates.

Three months later, in June 2022, CPI inflation peaked at 9 percent, and by July inflation was coming down. The fall in the rate of inflation, once it finally started, was about as rapid as the increase. (Unfortunately, it was not prices that were coming down, but only the rate of increase of prices.)

The downtrend of the CPI stopped suddenly in June of 2023 at 3.06 percent. As if it hit a hard surface, the blue line bounced up a little, came down, and then bounced a bit more before there was no more data available. The last blue dot represents April 2024. (The above graph, remember, is from June of that year.)

The red line on the right represents the "hard surface" where the rate of inflation was bouncing. That dashed red line runs just above the 3 percent level. The red line on the left indicates the 2 percent level. It shows the inflation target, the 2 percent annual inflation that the Fed thinks best for our economy. From start-of-data to early 2020, the blue line shows the annual rate of inflation running close to the target level. Inflation then dropped rapidly during the pandemic recession of 2020, but increased rapidly beginning in March 2021 as noted above.

In March of 2022 the Fed began increasing the Federal Funds rate, at a fairly rapid pace. The rate of inflation peaked in June 2022 and started to come down. Inflation stopped coming down a year later, in June 2023. The Federal Funds rate continued increasing until August 2023, when it reached 5.33 percent.

On the graph above, the interest rate (gray) that the Fed uses to keep inflation down continued at the 5.33 level, and the rate of inflation (blue) continued at roughly 3 percent, to end-of-data. Graph #2, below, shows the same datasets, updated thru July (for inflation) and August (for interest) of 2025:

Graph #2: January 2020 to August 2025

The rate of inflation came down from the June 2022 peak until June 2023, when it hit that "hard surface" just above the 3 percent level. With the interest rate running high since August 2023, inflation was not free to increase, but still refused to go below the 3 percent level until mid-2024.

Inflation fluctuated in small steps until March 2024. The Fed, however, was still holding the interest rate high and unchanged at 5.33 percent, and at that point the forces of inflation seemed to give up. The blue line shows a gradual but persistent, almost purposeful decline from March to September of 2024.

The Fed evidently noticed this fall of inflation to slightly below the 2.5 percent level, and relaxed ever so slightly: They reduced the interest rate a little in September 2024 and again in October. 

In October, the rate of inflation started rising again.

In every month from September 2024 to January 2025, the Federal Reserve reduced the interest rate. And every month from October 2024 to January 2025, the rate of inflation increased.

The Fed acted responsibly. They did not reduce the interest rate until inflation went below the 3 percent level. And they stopped reducing the interest rate when the rising inflation reached 3 percent. From January thru August of 2025 the Fed has held the interest rate steady at 4.33 percent, waiting for inflation to return to the 2 percent target level.

The Fed thought they had things under control. The economy didn't cooperate.

The Fed last reduced the interest rate in January 2025. They held it steady from February to August, where the data ends.

During this second phase of high-but-steady interest rates, the rate of inflation 

• fell from 3 percent in January 2025 to below 2.5 percent in March; 
• stabilized near 2.4 percent from March 2025 to May; and then
• rose in June and July, near the 2.75 percent rate and approaching 3 percent, again.

Before reducing the interest rate further, the Fed was waiting to see what inflation would do. Between March and September 2024, the Fed waited 5 months, with inflation falling every month, and did not reduce the interest rate until inflation went below 3 percent and continued going down.

In September 2024 the Fed was satisfied that they had inflation under control, and reduced the interest rate. The next month, inflation increased. The Fed remained confident, and continued reducing the interest rate in small steps. But inflation continued rising until January 2025 when it again reached 3 percent. Since January, the Fed has not changed the rate of interest.

 

That "hard surface" is the inflation target that our economy wants.

The Federal Reserve still trusts its 2 percent inflation target and still wants to see the rate of inflation running close to that level.

But the economy has a mind of its own, and wants a 3 percent inflation target, or perhaps 3.3 percent. The rate of inflation hit that hard surface in June 2023, stayed there until July 2024, and even now is not far from 3 percent.

There is a contest going on, a struggle between the Federal Reserve and economic forces; a contest between the Fed's 2 percent target, and the 3 percent target that our economy seems to want. How could this have happened?

Do you have too much money? No? Then the problem is not "too much money chasing too few goods." The problem is not demand-pull, but cost-push inflation. You know: the inflation that makes the economy slower rather than faster. The inflation that no one studies; instead they say "there's no such thing."

"Too much money" leads to too much spending, and too much spending pulls prices up. That's not the problem. If we had too much money, people would be saying the economy is great.

Our problem is "not enough money". Everyone knows it but the billionaires. We solve the problem by using credit: by borrowing money: by accumulating debt. The more we rely on credit, the greater is the cost of finance -- and the greater the cost of finance, the more it eats into wages and profits. 

And the more the cost of finance eats into wages and profits, the more we have to increase our reliance on credit. It's not a sustainable situation, and everyone knows it. 

Over time, debt accumulates more rapidly than income, and financial cost grows. I think that's what happened around the time of the pandemic. Before the pandemic, the 2 percent inflation target was working. During the pandemic we did a lot of borrowing. Consumers did, and businesses, and so did government. And now, after the pandemic, our debt-to-income ratios are higher, and our financial costs are higher. 

Before the pandemic, the 2 percent inflation target was still working. But costs increased, so 2 percent isn't enough anymore. That's why the endogenous 3 percent inflation target arose. And that higher target is the reason the Fed has such difficulty getting inflation down to 2 percent.

It's more than 2 years, now. Inflation stopped falling in June 2023. The Fed's continuing reliance on its 2 percent target -- and its attempt to push inflation below the endogenous 3 percent target -- has slowed and weakened our economy. The recent large downward revision in job growth may be just one of the consequences.

Plunging lumber prices pose warning sign for U.S. economy - WSJ

Following up, as promised. Here is a short list of crucial topics from today's Google News:

Inflation, still a problem:

• Inflation is climbing. Trump might still get lower rates. 29 August 2025. Politico

 

Jobs, largely a result of economic uncertainty. It didn't have to happen:

• August Job Cuts Leap in Blow to Trump Economy, 4 September 2025. Newsweek
• CNBC Daily Open: U.S. jobs report in August reveals damage the Fed should mend, 8 September 2025. CNBC. 

Tariffs are developing into a problem, on schedule:

• The US factory spending $100,000 a month more due to tariffs, 7 hours ago. BBC News.

 

Trump Dissing the Fed, a behavioral problem making things worse:

• Trump's calls to dismiss Fed governors undermine independence, Citadel CEO writes in WSJ op-ed, 8 September 2025. Reuters
• Ken Griffin Speaks Out Against Trump’s Attacks on the Fed, 8 September 2025. NY Times
• Trump’s Risky Game With the Fed, 7 September 2025. WSJ. 

And evidence that the Trump Recession is going to be a Depression. This is new. Now I'm worried:

• Lumber price slump signals broader slowdown in U.S. housing and wood demand, 8 September 2025. Lesprom. 
• Plunging lumber prices pose warning sign for U.S. economy - WSJ, 8 September 2025. Seeking Alpha. 

 

Remember, inflation had not settled down to the 2 percent target as of Trump's second inauguration in January of this year. Inflation was still a problem, then. On top of that inflation, Trump has added the tariffs -- tariffs which  increase prices more, and slow the economy besides. And now, despite the inflation, despite the tariffs, despite all the rising prices, lumber prices are "plunging". It is a "warning sign" indeed. It warns of a most severe slowing of the economy.

Economic stability is a good thing. Prices rising a little is a little troubling. Prices rising more because someone decided to put tariffs on everything is more troubling -- and worrisome, because the tariff is not normal policy. Many of Trump's policies and decisions are unusual and worrisome. The economy does not respond well to abnormal and worrisome behavior.

The most important point I want to make is that optimists may think Musk was right when he said his work at DOGE would "necessarily involve some temporary hardship."

Optimists may agree with the anonymous Twitter user who said

“If Trump succeeds in forcing through mass deportations, combined with Elon hacking away at the government, firing people and reducing the deficit - there will be an initial severe overreaction in the economy…Market will tumble. But when the storm passes and everyone realizes we are on sounder footing, there will be a rapid recovery to a healthier, sustainable economy.”

Severe overreaction, the anonymous user says. But severe is an understatement. And overreaction is an incorrect assessment; it will not be an over-reaction. Finally, the anonymous user's references to sounder footing, rapid recovery, and a healthier, sustainable economy are baseless, overly optimistic assessments.

Such optimism about the economy, these days, is a dangerous thing. If there are signs that our economy is moving into recession -- or worse, into depression -- our only sane move is to reverse course immediately and rescue ourselves from the slump before it is too late. The Trump administration will say they warned us about "temporary hardship". They will expect us to give their policy time to work. But we are doing that now. 

We  must not give the economy time to get worse and worse again.

The problem that must be resolved is the growth of finance. The solution is to recognize that the growth of finance increases financial cost, that debt is a mechanism which moves income from borrowers to lenders, and that financial cost pressure drives the long-term decline of our economy. Once these principles are well understood, economic policy must be changed to help people get out of debt -- not to encourage people to go into debt and remain in debt, as existing policy has done for the past 75 years.

Hemingway

"The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists."

 - Ernest Hemingway, "Notes on the Next War", Esquire, Sept. 1935. Quoted by Robert J. Gordon.

Friedman, Free to Choose, page 309

 

We have been forgetting the basic truth that the greatest
threat to human freedom is the concentration of power

Is this stuff still called "news"?

"A lot of people think that Covid is amazing," Trump said, referencing the vaccine, not the disease. - Politico

Comedy, maybe?

Unemployment as of August

I made the graph tall this time instead of wide:

Unemployment  2009 to 2025

I made the graph tall to make the vertical differences bigger in the red circle.

I made the graph narrow to make the data points close together so we can see a horizontal trend near the 3.5 percent level, an up-slope from the 3.5 level to the 4 percent level, and a horizontal near the 4 percent level. So I can summarize and say unemployment has increased, but I don't see any great crisis in the numbers -- not like there was in 2009, and not like there was in 2020. And not like what I see in the Google News. There is too much wishful thinking that passes for news these days.

I don't want to say I'm hoping Trump fails, because that would be bad for me and bad for us. But I do expect him to fail, because he is doing things that make no sense to me. 

The red circle highlights the recent years. In the red circle, unemployment comes down rapidly from the pandemic recession, then levels off and runs flat, in the neighborhood of 3.5 percent, from mid-2022 to mid-2023. Then it runs uphill for about a year, to the 4 percent level. Then it runs flat for a year, near the 4 percent level. And that brings us to where we are today.

I looked at it because the news is not good:

Yeah, 22,000 new jobs is a low number. But I don't see "dismal" in the red circle on my graph. Not yet, anyway.

////////////

UPDATE. --  7 Sept 2025  --  I'm finding plenty more bad-news-on-jobs. The news is certainly not good. 

From ABC News:

Job cuts soared in August, offering the latest evidence of a slowdown in the labor market as some economists warn of a possible recession, according to data released on Thursday by outplacement firm Challenger, Gray and Christmas (CGC).

U.S. companies announced nearly 86,000 jobs cuts in August, which amounted to a 39% increase from the previous month, CGC said. The figure indicated the largest number of job cuts in the month of August since 2020, which coincided with the onset of the COVID-19 pandemic.

Couple days, I will follow up with a follow-up post. 

Tight Money 2005-2008

Low gasoline prices

No news here. 

A government agency points out the low price of gasoline. CNN celebrates the low price of gas. And Fox Business attributes the low price to Trump's energy agenda. I think Fox would do better to attribute the low price to Trump's economic policies in total, but that's just me.

Low gasoline prices may mean the demand for gasoline is low. Maybe not, because the news today was predicting a high volume of Labor Day traffic. I guess we'll see.

If gas prices are low because demand is low, maybe demand is low because a recession is developing. 

I guess we'll see.

 

All old dates on these news items, for what that's worth.

 

I wanted to look at gasoline demand, but I ended up looking at prices. The price pattern seems about the same for all the data I looked at: A high point near $5 in 2022 ($6 for premium gas) working its way down to about $3 now ($4 for premium) and the decline appears to have stalled at that point.

The "low" we are at now is low compared to 2022 but high compared to 2020. So I don't see anything newsworthy about the recent price of gasoline. But I didn't know till I looked. 

I looked at 5 different graphs of gasoline prices. First, graphs for 3 different areas of the country:

• Average Price: Gasoline, Unleaded Regular (Cost per Gallon/3.785 Liters) in New York-Newark-Jersey City, NY-NJ-PA 
• Average Price: Gasoline, All Types (Cost per Gallon/3.785 Liters) in Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
• Average Price: Gasoline, Unleaded Regular (Cost per Gallon/3.785 Liters) in Phoenix-Mesa-Scottsdale, AZ

Two more graphs, these showing the average city price for Regular gasoline and High Test:

• Average Price: Gasoline, Unleaded Regular (Cost per Gallon/3.785 Liters) in U.S. City Average
• Average Price: Gasoline, Unleaded Premium (Cost per Gallon/3.785 Liters) in U.S. City Average

My record of prediction is complete failure so don't take my word for this, but I don't see any indication of approaching recession in the price of gasoline. But again, I did have to look or I wouldn't have known.

Going with my gut, I still think Trump's economic policies are moving us toward a depression (not recession). But that's just me. 

By the way...

Somehow the phrase "quantity of money relative to output" does not occur at all, not even once, in either Money Mischief or Free to Choose. 

600 of one, half a dozen of the other

This morning, just after 8 AM, Morning Joe Scarborough showed a tweet from Governor Newsom. It said crime is 400 percent higher in some red state than in some blue state, I don't remember which states.

Paraphrasing the tweet, Scarborough said crime is 400 times higher in the red state.

400 percent higher means 4 times higher. Not 400 times. 

It probably wasn't on purpose. He probably doesn't know. It's math stuff. But really, Joe, get it right!

I googled the tweet for details:

The states are Louisiana and California. And it's not the "crime" rate, it's the murder rate. But the politics of it is not my point. 

Friedman, too, was concerned about abuse of power

Milton Friedman in Free to Choose, page 309:

We have been forgetting the basic truth that the greatest threat to human freedom is the concentration of power, whether in the hands of government or anyone else. We have persuaded ourselves that it is safe to grant power, provided it is for good purposes.

 

See more of Gaio's response at Google Docs

Powell is the only one standing up to Trump

Madmen in authority, who hear voices
in the air, are distilling their frenzy from some
academic scribbler of a few years back.

 

On Morning Joe of 22 August they said again that Trump is always critical of Jerome Powell, the head of the Fed. They did not indicate that Presidents are ordinarily not like that to the head of the Fed. They did not mention that the Fed being "independent" was a decision made on purpose, to protect the economy from a president who might try to usurp power from every nook and cranny of government. 

Based on the MSNBC show, you'd think Trump's behavior was totally normal. It isn't. 

 

Jerome Powell is the only one left in the federal government who is standing up to Trump. You cannot imagine how much respect and admiration I have for Powell.

As part of that same segment, Morning Joe had Christine Romans on, talking about the economy. I remember Romans from the Lou Dobbs days, when Dobbs was just starting to get strange and taking the news personally, well before Dobbs went to FOX. 

But even FOX didn't work out for him. Good job, Dobbs. I count you as one more victim of our failing economy.

Anyway, Christine Romans pointed out that what's going on in the economy now is Trump's doing. It's Trump's economy now. "Trump's tariff economy," she called it.

She's right. It's all on Trump. And the "Trump effect" has only just begun. You think things are bad now? You just wait.

HOW CAN I DISAPPEAR THAT DAMN BUTTON?

Apparently new in Blogger, a round, pale-blue button that will "automatically insert google search links" into the text you are writing in the Blogger Editor.

Sounds like the generation of garbage, to me. But then, that's probably what Google thinks I'm doing, generating garbage.

The first time I tried it, it added this link to my words "round, pale blue button" -- a Google Images page showing... well, you can guess.

Blogger Help from vinay sati says

• This is a new Blogger beta feature, not part of AdSense.
• Blogger scans your post content and automatically turns certain keywords/phrases into links pointing to a Google Search results page.
• The purpose is to give readers more context if they want to explore related topics.

Well, a page full of images of pale blue buttons is not "context" for what I had written. So that's an AI failure, far as I'm concerned.

 vinay sati also says

• The feature is optional and currently in beta.
• It will not apply by default unless you choose to enable it in your Blogger dashboard under “Try new beta features.”
• If you test it and don’t like it, you can simply disable it again from the same menu.

First, I didn't know what the Blogger "dashboard" is, so I had to google that. Yeah, I use it all the time, but I didn't know it was called "dashboard".

Second, apparently it DOES apply by default, as there it is on my screen, ready and waiting for me to accidentally brush up against it.

Third, maybe I could disable the thing, and hide it, if the dashboard had a "Try new beta features" section. 

But thanks, vinay, for trying. 

Anyway, now I've wasted an hour or more of my Dwindling Time Remaining.

J.W. Mason on Recovery from the Next Downturn

"The problems of providing public goods and stabilizing the macroeconomy will not go away just because the federal government steps back from solving them."

- J. W. Mason in "Recovery from the Next Downturn May Depend on State and Local Governments"

History doesn't repeat itself, but it rhymes

Google's AI Overview: Munich Agreement

The Munich Agreement, signed on September 29-30, 1938, was an agreement between Germany, France, the United Kingdom, and Italy, allowing Nazi Germany to annex the Sudetenland, a region of Czechoslovakia with a predominantly German population. This agreement, reached without the participation of Czechoslovakia, is largely seen as a failed attempt at appeasing Adolf Hitler and preventing another world war, which it ultimately failed to do. 

Here's a more detailed breakdown:

Background:
Hitler was aggressively expanding German territory, targeting the Sudetenland, which he claimed was rightfully part of Germany.

The Agreement:
The Munich Agreement essentially ceded the Sudetenland to Germany, with the understanding that Hitler would make no further territorial demands in Europe.

Key Players:
The agreement was signed by Neville Chamberlain (UK), Édouard Daladier (France), Adolf Hitler (Germany), and Benito Mussolini (Italy).

Czechoslovakia's Exclusion:
The Czechoslovakian government was not invited to the negotiations, leading to a feeling of betrayal and abandonment.

Appeasement:
The agreement is a prime example of the policy of appeasement, where Western powers sought to avoid war by conceding to Hitler's demands.

Short-lived Peace:
Despite Chamberlain's declaration of "peace for our time," the agreement did not prevent the outbreak of World War II. Within a year, Hitler had annexed the rest of Czechoslovakia and invaded Poland. 

Consequences:
The Munich Agreement is often viewed as a significant foreign policy blunder, demonstrating the dangers of appeasing aggressive dictators.

The above link to this AI Overview text may turn up somewhat different text.

The phrase used as the title of this post is often attributed to Mark Twain.

Since Trump these days has a role like Neville Chamberlain, I googled neville chamberlain appeasement. The AI Overview told me this:

Neville Chamberlain is primarily known for his policy of appeasement, a diplomatic strategy that involved making concessions to aggressive powers to avoid war. In the 1930s, Chamberlain, as British Prime Minister, pursued appeasement towards Nazi Germany, hoping to avoid another devastating war after World War I. This policy is most famously associated with the Munich Agreement, where Britain and France allowed Germany to annex the Sudetenland region of Czechoslovakia. While Chamberlain believed this would bring "peace for our time," it is now widely viewed as a failure that ultimately emboldened Hitler and contributed to the outbreak of World War II.

 

What is to be done to avoid World War 3? I'm sure I don't know. 

How Trump got elected

On my Test Blog (from 2021) in a post titled "About 8 results", evidence that a Google search for Keynes's phrase "the greatest age of the inducement to investment" turned up 8 results.

Here on this blog (in 2023) a post showing that a Google search for my phrase "debt and civilization" turned up 9 results.

On this blog yesterday, a post showing that my Google search for Milton Friedman's sentence (showing how easy it would be to create a depression) turned up 6 results.

Almost no one is satisfied with our economy these days. But you wouldn't know it from the search results noted above. 

You want to know how Trump got elected? Everyone thinks they know what's wrong with our economy. But only about 6 people know, 8 or 9 at most.

6 results

Perhaps the most important sentence, now certainly the most urgent, in Milton Friedman's Money Mischief:

"There is strong evidence that a monetary crisis involving a substantial decline in the quantity of money is a necessary and sufficient condition for a major depression."

I googled it. Got 6 results -- and one of them was mine. There is very little interest in that particular sentence from Milton Friedman. 

(Item 9 in the Conclusion of Chapter 2. Page 48 in my paperback copy.)

Algorithmic Collusion

If you have access: Bloomberg at

https://www.bloomberg.com/news/articles/2025-07-30/wharton-experiment-finds-dumb-ai-bots-collude-to-rig-markets

The "Read the research here" link: https://www.nber.org/papers/w34054

Trump's economic strategy

If by some chance you hear Trump take credit for reducing the federal deficit, it will be due to the revenue from his tariffs. Be sure to give him credit, also, for the revenue flowing out of the private sector, and for the economic slowdown that follows.

If the tariff revenue is anywhere near enough to make a dent in the deficit, the resulting slowdown will give new meaning to the word severe. 

His plan appears to be to shift the deficit burden onto the private sector. Trump seems to think that by calling for lower interest rates, he will make this affordable. 

It will not work. The private sector is already too deep in debt. That's why we had the financial crisis of 2008. It took ten years of recovery, then, before we saw even a hint of a decent economy. I predicted that improvement, but it was far weaker than I expected.

Adding to the debt of the private sector is not a viable plan. The outcome will be the Trump Depression.

The Wrongologist quotes Joseph Heller

The Wrongologist quotes Joseph Heller:

“You know, that might be the answer – to act boastfully about something we ought to be ashamed of. That’s a trick that never seems to fail.”

There's a lot of it around these days, too.

 

Two links that are definitely worth your time:

• The Wrongologist
  
  
• Wisdomly's 86 Notable Quotes By Joseph Heller
   

Is it right to call such results "scientific investigation"?

Cooley and LeRoy (1981) have argued that a close correspondence tends to exist between the advocacy of a theory and the results of scientific investigation.

From "The Monetary-Fiscal Policy Debate and the Andersen-Jordan Equation"
by Dallas S. Batten and Daniel L. Thornton (1986).

Tell it to Trump

Alan Greenspan, in a 1998 speech, said:

Certainly, the degree of confidence that future outcomes are perceivable and projectable, and hence valued, depends in large part on the underlying political stability of any country with a market-oriented economy. Unless market participants are assured that their future commitments and contracts are protected by a rule of law, such commitments will not be made; productive efforts will be focused to address only the immediate short-term imperatives of survival; and efforts to build an infrastructure to provide for future needs will be stunted.

Top Wealthholders

From "Table 13.21-- TOP WEALTHHOLDERS: 1962 TO 1989":

Top wealthholders are defined as persons with a gross estate in excess of specified amounts, rising from $60,000 in 1962 to $600,000 in 1989.

From "Top 12 States for Wealthy Taxpayers, as Defined by the IRS":

The Internal Revenue Service defines wealthy individuals using the estate tax threshold, calling this group "top wealthholders." In 2019, the most recent year for which data is available, the threshold was $11.4 million.

And then there is "The Share of Top Wealth-Holders in Personal Wealth, 1922-56":

As defined in the text, a "top wealth-holder"is a living person with more wealth than the estate tax exemption level.

They look at top wealthholders as a fraction of the total population, and their share of the total wealth, and that sort of thing. But I don't find a list of estate tax exemption levels by date.

They also say data after 1948 is not comparable with earlier data because the marital deduction was introduced that year.

I don't understand Trump's focus on cutting federal employment

This Graph at FRED: https://fred.stlouisfed.org/graph/?g=1KqWl

How it was in 1962

"Congressional costs since 1953 have risen six times as fast as the rest of the federal budget"

Worth Bingham

apropos

From The General Theory Chapter 24, section IV:

War has several causes. Dictators and others such, to whom war offers, in expectation at least, a pleasurable excitement, find it easy to work on the natural bellicosity of their peoples. But, over and above this, facilitating their task of fanning the popular flame, are the economic causes of war, namely, the pressure of population and the competitive struggle for markets...

[U]nder the system of domestic laissez-faire and an international gold standard such as was orthodox in the latter half of the nineteenth century, there was no means open to a government whereby to mitigate economic distress at home except through the competitive struggle for markets...

But if nations can learn to provide themselves with full employment by their domestic policy (and, we must add, if they can also attain equilibrium in the trend of their population), there need be no important economic forces calculated to set the interest of one country against that of its neighbours. There would still be room for the international division of labour and for international lending in appropriate conditions. But there would no longer be a pressing motive why one country need force its wares on another or repulse the offerings of its neighbour, not because this was necessary to enable it to pay for what it wished to purchase, but with the express object of upsetting the equilibrium of payments so as to develop a balance of trade in its own favour. International trade would cease to be what it is, namely, a desperate expedient to maintain employment at home by forcing sales on foreign markets and restricting purchases, which, if successful, will merely shift the problem of unemployment to the neighbour which is worsted in the struggle, but a willing and unimpeded exchange of goods and services in conditions of mutual advantage.

Peace. 

A View of the Causes of our Late Prosperity and of our Present Distress

I came across a Google Book titled A View of the Causes of our Late Prosperity, and of our Present Distress; and of the Means which have Been Proposed for Our Relief. The book is from 1816, and the author unknown.

The following, from page 24 of that book, may be of interest:

 

Of Checks to the Increase of Revenue by
means of Bounties and Prohibitions.

Dr. Adam Smith observes, that it has been the great object of political economy to diminish the importation of foreign goods for home consumption, and to increase as much as possible the exportation of the produce of domestic industry; and that its two great engines for enriching the country have been restraints upon importation, and encouragements to exportation, by means of high duties, or prohibitions upon the one, and of drawbacks or bounties upon the other. The effect of restraints upon importation is to cause the inhabitants of any country to make at a greater expense what they can buy at a less, and to pay somewhat dearer to their own manufacturers than they would to foreign manufacturers, and this operation being performed in favour of several different manufactures, and paid for, more or less, by every individual in the kingdom, occasions a very considerable aggregate loss to the society.

Growth and Resilience

According to Google Ngrams, there used to be a lot of talk about good growth. These days there is little. These days there is more talk about economic resilience than there is about good growth:

According to Google's Oxford Languages, resilience is the ability "to recover quickly from difficulties" or "to spring back into shape". Either of those definitions could be applied to our economy. Maybe our economy does show "resilience" these days. But resilience means only occasional good growth. 

Economists are giving up on growth:

• Robert J. Gordon says there was "virtually no growth before 1750". He says there's "no guarantee that growth will continue indefinitely." And he says the good growth of the past 250 years could be "a unique episode in human history." This is what someone would say, who has given up on restoring health and vigor to the economy.
• In an article from Boston's NPR news station WBUR, ecological economist Kate Raworth is described as "subscribing to the theories of" Donella Meadows, who "said growth was a 'stupid' goal [and] impossible to sustain".
• And Dietrich Vollrath, economist and blogger, says "slow economic growth is a sign of success".

It is as if these people are trying to justify the inability of economists and policymakers to restore economic vigor. 

Such people are not caretakers of "the possibility of civilization." 

Good growth, redefined

In my previous post I quoted TV-show-President Josiah Bartlet from 25 years ago, who said GDP growth of 2 to 2½ percent is "lackluster, even anemic" and that growth in the 4½-to-5 percent range is "considered robust" but not "spectacular".

25 years ago, 2½ percent growth was thought lackluster. Sickly. Weak and unhealthy. In current thinking, 2½ percent growth is considered good. 

Today's definition of good growth is half what it was 25 years ago. They moved the goalposts. 

Keynes said economists are the caretakers of "the possibility of civilization." In other words, economists do not create civilization. They make it possible. 

Less optimistically, we can say that by holding to failed ideas, economists make civilization impossible.

A depression is a long, severe recession. A dark age is a long, severe depression. In the dark age, civilization is impossible.

Good growth, defined

From The West Wing, S1E17 (March 22, 2000) -- President Bartlet speaking:

Historically, 2 to 2.5% GDP expansion is classified as lackluster, even anemic economic growth. 4.5 to 5% is needed to be considered robust -- and not even spectacular.

"the fundamentals of our economy are sound"

Think so?

Open up Benjamin Friedman's 1986 paper "Increasing Indebtedness and Financial Stability in the United States" 

Search for the word recession and read some of the sentences that turn up.

The Emperor has no need for Senators

Impeach Trump before he dissolves the Senate.

All Employees, Federal

The May jobs report came out today. The graph shows the number of federal employees since December 2021 (not seasonally adjusted). I cut and pasted the dates for December 2024 and May 2025, essentially the change since Trump returned to  office:

FRED Source Data (since 1939): https://fred.stlouisfed.org/series/CEU9091000001

The graph shows the number of federal employees falling from 3,020 in December 2024 to 2,950 in May 2025. But the units are "Thousands of Persons" so we are talking a change from 3,020,000 to 2,950,000 employees. That amounts to a decrease of 70,000 employees in five months, or 14,000 per month on average.

At that rate, all federal employees could be gone in about 210.7 months. That's 17 years, 6 months, and 21 days give or take, if they keep at it 7 days a week.

I object to this news

Slide the ScrollBar Right to See More, or just Click the Image

Gaio reminds me that "The Federal Reserve (the Fed) returns a portion of its earnings to the U.S. Treasury" every year.

Reuters (March 24, 2023) says the Fed payment to Treasury was $76 billion in 2022 and $109 billion in 2021. Amounts like that would cover a lot of data-gathering cost at the BLS, if they just kinda bypassed the Treasury. 

To do its job, the Fed needs economic data from BLS and other sources. How are they going to fight inflation if they don't get the data from BLS??? Seems to me if they need the data, they can justify spending those billions to get it, even if it takes most of the profits the Fed would otherwise have paid to the Treasury.