Authored by Karl Denninger via Market-Ticker.org,

Oh boy….

President Donald Trump revealed that a staffer with national security advisor Mike Waltz’s office included the editor-in-chief of the Atlantic in a Signal group chat with senior Trump officials who were discussing plans for an upcoming strike on Houthi rebels in Yemen.

“It was one of Michael’s people on the phone. A staffer had his number on there,” Trump told NBC in a phone interview when asked how Jeffrey Goldberg, the Atlantic’s editor-in-chief, was added to the high-profile chat.

Who was the person with zero IT security expertise that had people in the DOD and NatSec part of the government using anything other than their own infrastructure for such things?

There’s utterly no reason to ever trust any external system for sensitive information internal to the government.

Ever.

Let’s say, for example, I send you an email.  I typically “sign” them.  By doing this the email has included both an attestation that it has not been altered, as otherwise the signature will not validate, and my public key.

Now if your computer has a trust chain to verify that — and I publish that, by the way (so it can validate that public key is good) then you can now send me an encrypted message.  Once you do so not even you can read it — only I can, because I’m the only one with the other half of the key.

With me so far?

Now let’s say we start up a conversation and we have ten people in there.  I send an encrypted message to all ten. What I actually send is ten messages because each person’s public key is different and again, each of them are the only people with the other half of it.  So far so good.  They each get it, they can decode it, but not the copy sent to anyone else — and since I signed it if that signature verifies they know it hasn’t been tampered with in transit.

But in this case, since you care about the integrity of who can be a part of conversations generally, all transmissions go through the government’s infrastructure.  The government, incidentally, already has the PKI infrastructure (issuing certificates, attesting to them, etc. — this is part of, but not all of, how a CAC card works) to do all this.

Thus when you send the message the server — which is a DOD/NatSec server — is the machine that processes it.  Because a public key is in fact public it knows who the message is going to (all of the recipients) and whether the DOD/NatSec servers issued the certificates involved and to whom.

The server cannot see the unencrypted contents of the message as only the recipient of each transmission has the private key required to decode it — but it knows who its going to and their public certificate.  This means it can be set up to look at same and refuse to deliver a message if it is to someone who doesn’t have a DOD-issued certificate and, for example, the other people in the communication do; it could either embargo it (after all, there might be circumstances where this is legitimate) or alert someone that something hinky may be going on, throw it in the trash summarily, or some combination.

It can’t see the contents, but it can interdict the message before it ever leaves the DOD and identify who transmitted it because the machine that sent it is known.

In other words if you set things up properly, and run them properly, what happened can’t happen and if it is attempted, either by accident or malice, not only does it not work the person who did it gets busted if the transmission was not legitimate.

Yeah.

That.

Security of communications is supposed to be important…. right?

So why did CISA, which is an official government agency, recommend Signal specifically when it has no nexus within the government and thus, while it may be end-to-end encrypted (and not full of holes, which I can’t speak to since I’ve never looked at it in sufficient detail to have a valid opinion) it has no means of controlling who is in a chat nor to prevent anyone who might, whether through accident or malice, add someone unauthorized to a new or existing one and there is no means for the participants or organization to which they belong to vet who is in said chat.

You can have the best encryption on the planet — absolutely impossible to break — but if there is either someone foolish or malicious it is meaningless exactly as while you can have a fortified home or business if you leave the front door unlocked it matters not.

The entire reason you use a chain of trust and only allow entities known to have been authorized through that chain to be included in any sort of access regime is precisely this.  Humans are both fallible and, from time to time, corrupt.

Either is fatal to a security scheme and thus you must design in and insist on a control process to mitigate that risk.

We do not, at present, know if the breach here was due to stupidity (accident counts) or malice but what we do know is that CISA — an official government source — made a recommendation during the last Administration (so no, you can’t lay this one on Trump) to use infrastructure for allegedly “secure” communications that lacked any measure of control over human accident or malice in terms of recipient (and group) management.

This incident, beyond the actual person who added (or changed) the recipient so that reporter was in the list, is directly chargeable against CISA and their recommendation.  Since it is their job to put forward such standards for the government this is a fatal failure and every individual involved in that process, no matter how small their involvement, must be both publicly identified and expelled.  As there was apparently no classified data breached as a result of this criminal sanction is not appropriate — but permanent severance from any government employment now and in the future, along with summary and permanent revocation of any clearance held by said persons is not just advisable — it is mandatory.

Security is a process, not a product.

Canadian Prime Minister Mark Carney gave a blistering speech on Thursday, declaring that the era of deep economic, security and military ties with the United States “is over,” after President Donald Trump announced steep auto tariffs of 25% on imports into the United States – which could affect an estimated 500,000 jobs in the Canadian auto industry.

“We will fight the U.S. tariffs with retaliatory trade actions of our own that will have maximum impact in the United States and minimum impacts here in Canada,” Carney said during a press conference that took him off the campaign trail ahead of the country’s April 28 general election, adding that “Nothing is off the table to defend our workers and our country.“

One option would be for Canada to impose excise duties on exports of oil, potash and other commodities – however the Canadian government says they will delay any sort of announcement until they see what the Trump administration does on April 2, Carney told reporters.

Carney called Trump’s auto tariffs “unjustified” and said they were in breach of existing trade deals, while also warning Candians that Trump had permanently altered relations to the point that regardless of any future deals, there would be “no turning back.”

Prime Minister Mark Carney says Canada “won’t back down” from President Donald Trump’s trade war and tariffs on the auto sector.

Mark Carney is the former chair of Bloomberg’s board of directors https://t.co/SYXhdGMOop pic.twitter.com/j1sPOHSy5a

— Bloomberg TV (@BloombergTV) March 27, 2025

“The old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over,” he said, adding that Canada’s response to the tariffs “is to fight, is to protect, is to build.”

“We will fight the US tariffs with retaliatory trade actions of our own that will have maximum impact in the United States and minimum impacts here in Canada,” Carney added.

Meanwhile, Ontario Premier Doug Ford spoke with US Commerce Secretary Howard Lutnick, and said Lutnick confirmed to him that Canada won’t be hit with an ‘immediate’ tariff, and that finished vehicles with US parts will face a rate lower than 25%. A car with US parts would instead be subject to a tariff of 12.5%.

Ford told reporters Lutnick did not give him any assurances there would be any easing or softening of the tariffs.

When Ford was asked whether Lutnick knows what Trump is planning to announce April 2, he said. “I think he has an idea.” Then the premier added: “Or maybe he doesn’t. That’s even scarier if he doesn’t. So let’s see what they come forward with on April 2, but we’re prepared, we’re ready.” –Bloomberg

“Americans need us. I told him,” said Ford of his call with Lutnick, adding that he’s “not sure” if the Trump administration fully understands the North American vehicle supply chain.

“They don’t have the people down there to fill the jobs.”

The White house, meanwhile, has reached out to schedule a call with Carney, which he says should happen in the “next day or two,” but that while he’ll talk to Trump – he will not participate in substantive trade negotiations with Washington until Trump shows Canada “respect,” which would include cutting out Trump’s repeated threats to annex Canada as America’s 51st state.

“For me, there are two conditions, not necessarily for a call, but a negotiation with the United States. First Respect, respect for our sovereignty as a country… apparently it’s a lot for him,” Carney said, adding “There has to be comprehensive discussion between the two of us, including with respect to our economy and our security.”

*  *  *

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Authored by Zachary Stieber via The Epoch Times (emphasis ours),

At least 10 illegal immigrants who were recently deported by U.S. authorities to El Salvador were returned to the United States, according to new court filings.

Nine women on one of the planes that landed in El Salvador were kept on board the aircraft and ultimately transported back to America, a Venezuelan national with the initials S.Z.F.R. said in one of the documents that was filed with the federal court in Washington on March 24.

The woman said that after a refueling stop, the plane was said to have landed in El Salvador. The men were led off the plane, but the women were not.

“I was told that the President of El Salvador would not accept women. I was also told that we were going back to detention in the U.S.,” the woman said.

She said that all of the women on the plane were taken to Laredo, Texas, where they had been before departing for El Salvador.

The sworn declaration was entered in a legal case involving the use of the Alien Enemies Act by the Trump administration. After President Donald Trump signed an order declaring an invasion of the United States by the Venezuelan terrorist gang Tren de Aragua, U.S. authorities transported some illegal immigrants suspected of being part of the gang to El Salvador, which entered an agreement with the United States to accept criminal deportees for incarceration.

Venezuelans in immigration custody sued, alleging the proclamation was illegally being used against nationals of a country that is not at war with America.

 U.S. District Judge James Boasberg on March 15 blocked the administration from deporting alleged gang members solely under the Alien Enemies Act. A U.S. official said that two planes were already outside U.S. airspace when the judge’s order was released. A third plane did depart after the order but contained illegal immigrants who had been ordered removed by U.S. judges, the official said.

In a separate declaration, a Nicaraguan male whose name was redacted said he was placed on a plane on March 15 along with others, including Venezuelan and El Salvadoran nationals. He said the plane flew to El Salvador and that he was removed from the aircraft. After he answered questions about his citizenship, he was told to sit on the floor of one of the planes, he said.

“I overheard a Salvadoran official tell an ICE officer that the Salvadoran government would not detain someone from another Central American country because of the conflict it would cause. I also heard him say that they would not receive the females because the prison was not for females, and females were not mentioned in the agreement,” the man said.

The man said he was sent back to Texas, arriving on March 16.

“These declarations are submitted to refute the government’s contention that it was not ‘feasibl[e]’ for the planes to bring anyone back and that this Court did not account for practical considerations like whether the planes ‘had enough fuel’ to turn around,” lawyers for the illegal immigrants told Boasberg.

In a previous motion, government lawyers said the judge incorrectly suggested that a government attorney was able to divert the aircraft carrying the deportees.

“The comment betrayed a complete misunderstanding of the serious national security, safety, regulatory, and logistical problems presented by a fiat from the Court directed at pilots operating outside the United States and was made without regard to whether any such aircraft could feasibly be diverted or even had enough fuel to safely do so,” the government lawyers stated.

The U.S. Department of Homeland Security did not respond to a request for comment.

Lawyers for the plaintiffs say Boasberg should find that the illegal immigrants were illegally removed in violation of his order and that he should order those who were illegally deported to be returned to the United States.

In other developments in the case on Thursday, a federal court heard the Trump administration’s appeal of Boasberg’s order. The administration invoked a state secrets privilege, informing the judge that officials would not provide information about deportees.

Boasberg said on Friday that plaintiffs must respond to the invocation by March 31 if they want to be heard.

At the start of the week, multiple open-source intelligence accounts on X reported that U.S. stealth bombers were deployed to a strategic island in the Indian Ocean—often referred to as Washington’s “unsinkable aircraft carrier“—located between Africa and Indonesia, about 1,000 miles south of India. 

Fast forward to Wednesday: new Planet Labs satellite imagery, posted on X by the Indo-Pacific Watch Center (IPWC), shows “3 (or possibly 7) B-2 bombers and 9 KC-135s” at the U.S. military base on Diego Garcia—strongly suggesting a force buildup aimed at projecting power in the region and keeping Tehran in check. 

“Hardened shelters are essential for the security of US MIL assets. Strategic power display can work to deter enemies, but we must have adequate shelters, especially hardened shelters at Diego, Kadena, Andersen, etc,” IPWC said, adding, “Our nation’s enemies have ISR, so stop using “show/conceal” as the excuse to not protect aircraft from sun/rain/inbound PLARF warheads when the game begins.  Start building now.  Hey Anduril – can you pour concrete?” 

Diego Garcia, March 25 2025. 3 (or possibly 7) B-2 Bombers & 9 KC-135. Hardened shelters are essential for the security of US MIL assets. Strategic power display can work to deter enemies, but we must have adequate shelters, especially hardened shelters at Diego, Kadena,… pic.twitter.com/TccJxVXq2r

— IPWC (@IndoPacWatch) March 26, 2025

Most Americans have never heard of the tiny 38-mile-long island, nor has any journalist been allowed access in over three decades. The island features a runway long enough to accommodate B-52, B-1, and B-2 bombers and massive C-5M, C-17, and C-130 military cargo planes. The U.S. hosts upwards of 5,000 military personnel and civilian contractors on the secretive island, which is considered a lynchpin of U.S. foreign policy in the Middle East and across the Indo-Pacific. 

Counterpunch’s Conn Hallinan noted in 2019: “Diego Garcia is central to the U.S. war in Somalia, its air attacks in Iraq and Syria, and its control of the Persian Gulf, and would be essential in any conflict with Iran.” 

Meanwhile, National Security Adviser Mike Waltz recently confirmed that the Trump Administration demanded the “full dismantlement” of Iran’s nuclear program, including its capacity to enrich uranium for civilian use. Russia issued a statement rejecting U.S. demands, saying Tehran has the right to a peaceful nuclear program. 

Tehran is starting to understand that multiple U.S. stealth bombers are now within striking distance. 

Authored by Victor Davis Hanson via American Greatness,

The Democratic Party is polling about 27 percent approval—and sinking.

In 2024, it lost the White House, the House of Representatives, the Senate, and both the popular vote and the Electoral College, 312-226.

In 2024, Trump won over 46 percent of the Hispanic vote, including a majority of Hispanic men. Trump also likely captured 26 percent of the black male vote, doubling his 2020 total.

In 2024, Trump increased his 2020 vote total in every single state. And he won 89 percent of all the counties in the United States.

On every issue, Democrats sided with strident leftist movements rather than the majority of Americans.

They supported globalism over nationalism, high-priced green energy over lower gas and electricity prices, and an open border and 12 million unaudited illegal aliens over security and legal-only immigration.

They seem unconcerned with our $36 trillion debt or the deterrence lost abroad that led to two theater-wide existential wars.

Democrats stay mum about unfair trade and budget deficits. They prefer the Black Lives Matter fixation on the color of our skin rather than Martin Luther King’s emphasis on the content of our character.

They support allowing biological men to overpower women in female sports events—in opposition to 80 percent of the electorate.

Democrats faced choices after their catastrophic defeat last year.

One, they could have stopped the hemorrhaging of their base of 18-30-year-olds, black men, Hispanics, and Independents by moving toward the center.

They even could have worked with Trump and perhaps sought to take credit for joint successes.

Instead, they doubled down on “resistance” through street-theater terror-chic.

Democrat senators cut a group attack video, each echoing the potty word “sh*t.”

In a House ad, Democratic female members mimicked ninjas, kicking and punching at the camera, as if hitting their Republican opponents.

Former vice presidential candidate and Minnesota governor Tim Walz boasts about kicking the “ass” of Republicans.

“Assh*ole” is now the standard Democrat epithet for Musk, as voiced by Sen. Mark Kelly. “D*ck” is the preferred Musk slur from Sen. Tina Smith.

Xenophobia is also now Democratic chic.

Walz smears Musk, an American citizen, as a “South African nepo baby.”

Other Democrat representatives question Musk’s loyalty, asking, “Which country is he [Musk] loyal to?”

Or they further boast, “We’re [Democrats] going to send Elon back to South Africa.”

An unhinged Rep. Maxine Waters shouts that she wants First Lady Melania Trump deported, given she too is a naturalized citizen.

But those theatrics have now escalated into near overt support for violence.

Democrats are blocking the deportation of dangerous illegal aliens affiliated with the terrorist-designated Tren de Aragua.

They try to stop the deportation of resident alien Mahmoud Khalil—arch Hamas supporter, apologist for the murderers of October 7, and a spokesman for the most violent student group at Columbia.

To stop Elon Musk’s advisory Department of Government Efficiency and its identification of government waste, fraud, and abuse, leftist cabals are now terrorizing Musk’s Tesla brand nationwide.

They seek to destroy cars, dealerships, and charging stations. Individual Tesla owners are sometimes tailed, confronted, and threatened.

Democrats claim no formal role in such terror—but more or less seem to approve of its ends and means.

Left-wing comic Jimmy Kimmel winks and nods on national television about the current violent Tesla terrorist campaign.

Tim Walz celebrates the resulting drop in the Tesla stock price. As Minnesota’s governor overseeing his state’s sizable investment in Tesla, Walz could care less about trash-talking his own taxpayers’ investments.

Rep. Jasmine Crockett boasts that Musk “must be taken down.”

She brags she wants to physically assault Sen. Ted Cruz, who “has to be knocked over the head, like hard”—adding “I think you punch, I think you [sic] OK with punching.”

Crockett even mocked disabled and wheelchair-bound Texas governor Greg Abbott: “You all know we got Gov. Hot Wheels down there. … And the only thing hot about him is that he is a hot-ass mess, honey.”

Former Democratic House member and once-censured Rep. Jamaal Bowman claimed Musk was a “Nazi” and an “incompetent thief.”

Democrat Rep. Al Green was censured by the House for disrupting the Trump joint address to Congress—and led away screaming and shaking his cane at the President in failed efforts to shut down the speech.

Senator minority leader Chuck Schumer, who once issued threats to Supreme Court justices Neal Gorsuch and Brett Kavanaugh by name, now boasts, “We have people going to the Republican districts and going after these Republicans who are voting for this and forcing them to either change their vote or face the consequences.”

Furious at their own increasing impotence, these contemporary Democrat Jacobins are dabbling with their own version of a reign of smut terror.

They are probably too impotent to derail the country, but they are certainly destroying themselves.

Authored by Tom Ozimek via The Epoch Times,

A federal appeals court has temporarily blocked a discovery order from U.S. District Judge Tanya Chutkan that would have required Elon Musk and the Department of Government Efficiency (DOGE) to turn over documents and respond to written questions about their role in advising cuts in certain parts of the federal government.

In a ruling issued on March 26, the U.S. Court of Appeals for the D.C. Circuit granted an emergency stay of Chutkan’s March 12 order, which had largely granted limited, expedited discovery to a coalition of 13 Democratic-led states, requiring Musk and DOGE to produce documents and respond to questions within 21 days.

The appeals court ruled that Musk and DOGE had “satisfied the stringent requirements for a stay” and showed that they are likely to prevail in their claim that the lower court must resolve their motion to dismiss before allowing discovery to proceed.

“In particular, petitioners have shown a likelihood of success on their argument that the district court was required to decide their motion to dismiss before allowing discovery,” the three-judge panel wrote in its ruling.

Following the appellate court ruling, Chutkan entered a minute order acknowledging the decision. She has canceled a status hearing previously scheduled for March 27.

The case, brought by New Mexico and a coalition of 12 Democratic-led states, challenges the legality of DOGE’s sweeping cost-cutting efforts, which have included the cancellation of federal grants and mass terminations of government employees from jobs identified by DOGE as unneeded.

The plaintiffs argued in their original complaint that Musk is effectively running DOGE without Senate confirmation, allegedly in violation of the Constitution’s Appointments Clause.

“Oblivious to the threat this poses to the nation, President Trump has delegated virtually unchecked authority to Mr. Musk without proper legal authorization from Congress and without meaningful supervision of his activities,” the plaintiffs allege. 

“As a result, he has transformed a minor position that was formerly responsible for managing government websites into a designated agent of chaos without limitation and in violation of the separation of powers.”

In a subsequent motion for a temporary restraining order against Musk and DOGE, the states further accused Musk of unlawfully exercising sweeping executive power without Senate confirmation, directing federal agencies to fire employees, cancel contracts, dismantle programs, and access sensitive government data.

In response, government lawyers urged the court to reject the emergency motion. They argued that the states had failed to show any imminent or irreparable harm, and said the restraining order sought was overly broad, legally unsupported, and disconnected from core constitutional claims made by the plaintiffs. Even if Musk were improperly appointed, they argue, sharing data with him or others at DOGE does not, by itself, constitute an illegal exercise of government power. Musk also is not empowered to act without the president’s approval, they said.

Chutkan partially sided with the Democrat-led states on March 12, ordering Musk, DOGE, and related entities to turn over documents about firing federal workers and altering government databases. She also required DOGE to identify everyone who has led or worked at the agency since President Donald Trump took office, and list all agencies where DOGE or Musk canceled contracts, cut grants, or terminated employees.

Trump and Musk have both said that DOGE has been assisting various agencies that have fired or offered buyouts to tens of thousands of federal workers since Trump returned to office on Jan. 20, 2025.

Musk, as a special government employee, has been tasked by Trump to lead DOGE to help fulfill his campaign pledge of reducing waste, streamlining federal operations, and cutting red tape.

The DOGE team has taken quick action to audit and pursue reforms across federal agencies. It recently reported $130 billion in savings through canceled grants, asset sales, workforce reductions, and terminated contracts and leases.

Critics of DOGE have argued that its activities raise security and oversight issues, with a number of lawsuits filed challenging its operations.

Musk recently revealed that the DOGE team has been receiving death threats on a daily basis.

“The DOGE team is getting death threats every single day,” Musk said during a March 24 White House cabinet meeting. “They’re just trying to do the right thing for the American taxpayer and for the American people.”

Authored by Alex Younger via The Mises Institute,

So much has been written about why we should end the Federal Reserve, and with the recent public demand for an audit, the message has finally reached the masses. Hopefully, if such an audit manifests, it will be the first step toward ultimately dismantling the Federal Reserve. (We should start with the extremely shady Bank Term Funding Program). But very little has been written about how to end the Federal Reserve, and that is what I wish to address here.

The How

You may read through my proposed plan and disagree with me on the details. But we must agree on this point: The key objective is to minimize any fluctuations in the current money supply as best we can. This can be done in a delicate manner that might even go unnoticed by the market, outlined in 5 steps:

1. Revoke All Federal Reserve Monetary Policy Privileges

The Federal Reserve should no longer have the ability to directly manipulate the money supply. Repeal the Federal Reserve Act.

2. Lock Down All Debt Assets on the Federal Reserve Balance Sheet

This refers to all assets on the balance sheet with a contractual expiration, such as US Treasuries, mortgage-backed securities, and other loan types. These assets make up roughly 99 percent of the Fed’s balance sheet. Rather than selling them, they should be allowed to expire naturally over the next 30 years—the longest duration of USTs and MBSs. During this period, the Fed may still collect interest payments on these assets and reinvest them to prevent removing those funds from the monetary base.

3. Gradually Sell Off Non-Expiring Assets

Any assets on the Federal Reserve’s balance sheet that lack a contractual expiration should be sold off gradually over a period of 1 to 5 years. At present, I have been unable to find a reliable estimate of how much of this asset type exists, but I suspect it is relatively small—possibly less than a billion dollars.

4. The Federal Reserve Becomes a True Private Institution with No Special Legal Privileges

The Federal Reserve should operate as a fully private institution, stripped of any special legal banking privileges. Its only remaining advantages would be its established market position, its role in facilitating bank-to-bank lending, the interest payments from existing assets on its books, and its historical significance. This is far more than it deserves, but the primary objective must be to dismantle its power without triggering economic catastrophe.

5. If the Federal Reserve Cannot Function as a Private Bank

If the Federal Reserve fails to maintain its market position—which is likely, given that it has never truly faced competition—then major banks will need to determine among themselves how to facilitate interbank lending. They may assign central banking functions to other private institutions, operating within the limits of private banking law. Alternatively, the market may simply deem the Federal Reserve obsolete, allowing it to wither away naturally. Either outcome would be entirely acceptable.

The Balance Sheet Details

As of this writing, the Federal Reserve holds $6.8 trillion on its balance sheet. This follows a sharp 25 percent reduction from its previous $8.9 trillion over the past two years—a decrease of $2.1 trillion. In other words, the Fed initially printed $8.9 trillion and used this newly-created money to purchase assets in the market.

What has the Federal Reserve been buying? Primarily US debt. Our financial system functions like an ouroboros, with the Federal Reserve acting as a perpetual buyer of new government debt—funded by printed money. As of this writing, the Fed holds approximately $5 trillion of the national debt and artificially inflates domestic demand for it. Ending the Federal Reserve would severely restrict the government’s ability to create new debt, forcing a fundamental shift in government spending policy:

Fed Balance Sheet Composition

Currently, $4.2 trillion of the Federal Reserve’s balance sheet consists of US Treasury bonds (USTs), while another $2.2 trillion is made up of mortgage-backed securities (MBS). Together, these two asset classes account for $6.4 trillion, or about 94 percent of the total balance sheet. The remaining 6 percent is a mix of various other debt securities, including corporate debt, federal agency debt, and other loan types, all of which also have contractual expiration dates.

Natural Expiration of Debt Assets

Let’s consider the potential consequences of abandoning current monetary policy and requiring the Federal Reserve to let its debt assets naturally roll off the balance sheet. Debt contracts have expiration dates, meaning that once they reach maturity, they expire worthless and can simply be removed from the balance sheet without active intervention. This approach would gradually shrink the Fed’s holdings over time, reducing its influence on the financial system without the immediate shock of mass asset sales.

Here is a projection of the balance sheet over the next 30 years under this plan:

Projection of Assets Naturally Expiring on Fed Balance Sheet.

The debt expirations are front-loaded, meaning the Federal Reserve’s balance sheet would experience a sharp initial decline before tapering off over time. In the first year, we would see a significant 10 percent reduction, which would gradually level out to a 1.7 percent decrease per year. On average, the decline would be around 3.1 percent annually.

This projection assumes the Fed has purchased debt with an evenly distributed range of expiration dates across different maturity groups, which is likely accurate. In reality, the actual decline would be somewhat more volatile due to variations in the composition of the Fed’s holdings.

Not Quantitative Tightening

The key advantage of this approach is that it differs from traditional quantitative tightening. No funds would be actively removed from banks’ reserves—those reserves would remain at their current levels. Instead, the Federal Reserve’s balance sheet would shrink passively as debt assets naturally expire, avoiding the disruptive liquidity drain that comes with aggressive asset sales.

To fully understand this, a brief crash course in quantitative tightening (QT) is necessary. Admittedly, there is a certain genius to the way Federal Reserve monetary policy operates. When the Fed tightens, it sells assets from its balance sheet to primary dealers (large banks) on the open market. The Federal Reserve essentially functions as a “bank for big banks,” where major US banks store their reserves much like a savings account. These reserves not only remain at the Fed but also earn interest, just like a traditional savings account. This structure allows the Fed to influence liquidity in the financial system without directly impacting the day-to-day operations of commercial banks, making its monetary policy more indirect but highly effective.

When the Fed sells assets to primary dealers, it sells to banks that already have reserve accounts at the Fed. This means the money used to purchase these assets is already parked at the Federal Reserve. When the Fed either sells securities or allows them to mature without reinvesting, two things happen simultaneously: 1) the Fed’s assets decrease as the securities leave its balance sheet; 2) the bank’s reserve account at the Fed decreases by the same amount. These two changes cancel each other out, effectively removing that portion of the monetary base from circulation. This is how quantitative tightening (QT) functions—it contracts the money supply by destroying reserves, rather than directly pulling cash from the economy.

The key difference in my proposed approach is that the Fed would continue receiving interest payments on its remaining assets for the duration of their terms. The most realistic scenario is that these funds will be used to pay interest on reserves held by banks at the Fed, allowing normal banking operations to continue without disruption. However, unless the Fed finds an alternative revenue source, the interest on reserves rate can be expected to gradually decline over the next 30 years as assets roll off the balance sheet. This slow adjustment provides banks with ample time to determine how to manage their reserves in a post-Fed environment.

Inflationary vs. Deflationary Pressures

One likely outcome of this transition would be an increase in business investment by big banks. The interest on reserves paid by the Fed has historically discouraged banks from investing in the open market. From the bank’s perspective, why would I go make a risky investment into some startup, or some business which could hit rough waters and default, when I could just park my assets at the Fed and make a risk-free 4.4 percent? Basically, the Fed has been paying banks to not loan you money.

As the Fed’s ability to pay interest on reserves diminishes over time, banks would have a stronger incentive to deploy their capital elsewhere, likely fueling greater investment in businesses, loans, and other market-driven opportunities. This new pressure on banks to seek better investment opportunities within the first five years of this transition will create an inflationary counterbalance to the deflationary pressure that naturally comes with ending the Fed.

As banks shift their reserves into the market, increased lending and investment could stimulate economic activity, offsetting the contractionary effects of removing the Fed’s artificial demand for debt. This dynamic could help stabilize prices during the transition, preventing a sudden economic shock while still moving toward a more market-driven monetary system.

Conclusion

The ideal outcomes from this arrangement would be the following:

• The Fed loses its extra-legal authority, operating solely as a private institution;

• Direct central planning of interest rates ends, eliminating monetary supply manipulation;

• Minimal fluctuation in the money supply, as bank reserves remain unaffected and the Fed continues receiving interest payments on its debt assets, preventing a liquidity drain;

• Market stability, with little disruption to economic equilibrium;

• Slight dollar appreciation, as the deflationary effects of ending the Fed are counterbalanced by banks investing their reserves;

• No rush for banks to find alternative bank-to-bank lending solutions, ensuring a smooth transition;

• No need to rewrite ACH payment systems, which currently rely on the Federal Reserve;

• Greater urgency in reducing federal debt, as an appreciating currency increases the real debt burden;

• A shift toward more prudent and productive financial behavior, as stronger purchasing power encourages saving and discourages reckless debt accumulation.

Authored by Katabella Roberts via The Epoch Times,

A federal judge has declined a request by the Trump administration that she remove herself from overseeing a lawsuit challenging an executive action targeting Perkins Coie LLP, accusing the Justice Department of attacking her character in an effort to undermine the integrity of the judicial system.

U.S. District Judge Beryl Howell wrote in a March 26 ruling that a Trump administration filing seeking her recusal was “rife with innuendo” and that none of the claims it put forward “come close to meeting the standard for disqualification.”

“Though this adage is commonplace, and the tactic overused, it is called to mind by defendants’ pending motion to disqualify this Court: ‘When you can’t attack the message, attack the messenger,’” U.S. District Judge Beryl Howell wrote in a March 26 ruling.

President Donald Trump’s action issued on March 6 prevents law firm Perkins Coie from doing business with federal contractors and blocks its lawyers from accessing government officials.

Additionally, it suspends any active security clearances held by individuals at the firm, pending a review of whether such clearances are consistent with the national interest.

Perkins Coie was hired by Hillary Clinton’s presidential campaign and the Democratic National Committee in 2016.

According to the presidential action issued by Trump, the law firm has engaged in “dishonest and dangerous activity” that has affected the United States “for decades.”

The firm sued the administration over the order in federal court in Washington on March 11, alleging Trump’s actions violated its rights under the U.S. Constitution.

Roughly a week after Trump’s executive action was first issued, Howell temporarily blocked the administration from enforcing much of it, finding the law firm was likely to win its lawsuit.

Last week, the Department of Justice (DOJ) asked for the case to be moved to another judge in Washington’s federal court, citing Howell’s public comments about the president and her connection with key aspects of the case.

“This Court has not kept its disdain for President Trump secret,” Chad Mizelle, acting associate attorney general at the DOJ, wrote in a motion seeking her disqualification. 

“It has voiced its thoughts loudly—both inside and outside the courtroom.”

Speaking inside the court, Mizelle also pointed to now-former special counsel Jack Smith’s prosecution of Trump, during which he said that Howell found “reason to believe that the former President would ‘flee from prosecution.’”

The judge also “pierced attorney-client privilege, ordering President Trump’s attorney to testify before a D.C. grand jury” investigating his alleged retention of classified documents in the South Florida case, he said.

Mizelle added that Howell also previously rejected Trump’s view that the indictments against individuals involved in the Jan. 6, 2021, breach of the U.S. Capitol were a “national injustice” and called his supporters “sore losers.”

In her 21-page ruling, Howell wrote that when the DOJ “engages in this rhetorical strategy of ad hominem attack, the stakes become much larger than only the reputation of the targeted federal judge.”

“This strategy is designed to impugn the integrity of the federal judicial system and blame any loss on the decision-maker rather than fallacies in the substantive legal arguments presented,” she added.

The judge said she welcomed the Trump administration’s opportunity “to set the record straight, because facts matter.”

“Every litigating party deserves a fair and impartial hearing to determine both what the material facts are and how the law best applies to those facts,” she wrote. 

“That fundamental promise, however, does not entitle any party—not even those with the power and prestige of the President of the United States or a federal agency—to demand adherence to their own version of the facts and preferred legal outcome.”

“The clear absence of any legitimate basis for disqualification requires denial” of the DOJ’s request that she recuse herself from the case, the judge said.

Howell is set to decide in the coming weeks whether to extend her block on Trump’s order against Perkins Coie.

The Epoch Times has reached out to Perkins Coie for comment.

Authored by Naveen Athrappully via The Epoch Times,

U.S. Secretary of Energy Chris Wright said this week that the Department of Energy (DOE) had further postponed the effective dates for three Biden-era home appliance mandates.

The mandates were previously postponed in February. The department has delayed “effective dates for three home appliance rules: Test Procedures for Central Air Conditioners and Heat Pumps, Efficiency Standards for Walk-In Coolers and Freezers, and Efficiency Standards for Gas Instantaneous Water Heaters,” according to the DOE’s March 24 statement.

The department has also officially withdrawn four conservation standards that applied to ceiling fans, dehumidifiers, external power supplies, and electric motors.

The decision “marks a key step in lowering costs, enhancing performance, and expanding options for American consumers,” the department said.

The Biden-era rule on central air conditioners and heat pumps amended test procedures for these appliances, with manufacturers required to use the new test procedures on their products. The effective date of the rule was Feb. 6.

Regulations on coolers, freezers, and gas water heaters amended energy conservation standards for these appliances, with the updated rules initially set to be effective from Feb. 21, and regulations for gas water heaters initially to be effective from March 11.

At the time, the DOE, under the Biden administration, said that the updates “would result in significant conservation of energy, and are technologically feasible and economically justified.”

In 2023, consumer watchdog Alliance for Consumers calculated the cost of President Joe Biden’s regulations on appliances such as water heaters, air conditioners, gas stoves, and other devices. The watchdog found that these measures would cost the average American household more than $9,100.

In its decision to delay the effective dates of the three home appliance rules, the DOE said it acted in accordance with President Donald Trump’s Jan. 31 executive order “Unleashing Prosperity Through Deregulation.”

The presidential action aims to “alleviate unnecessary regulatory burdens” and prevent the federal regulation from imposing “massive costs on the lives of millions of Americans.”

Wright said that the DOE is taking “critical steps” to help American families prosper under the Trump administration.

“By removing burdensome regulations put in place by the Biden administration, we are returning freedom of choice to the American people, ensuring consumers can choose the home appliances that work best for their lives and budgets,” Wright said. “This power should not belong to the federal government.”

Tackling Appliance Rules

Republican lawmakers have taken action against the Biden administration’s policies targeting appliances.

In January, the House passed a resolution to repeal energy standards targeting consumer gas-fired instantaneous water heaters. Eleven lawmakers from the Democratic Party joined Republicans in voting for the resolution.

At the time, House Speaker Mike Johnson (R-La.) said that the American people “made it clear they want lower costs and more choices, and we are keeping our promise to undo the damage of the last administration.”

The National Association of Home Builders (NAHB) supported the resolution, criticizing the new standards for gas water heaters, warning that the rules would push up costs and create “unnecessary challenges,” thus significantly affecting builders and homeowners.

“The push for a shift to more expensive condensing gas water heaters presents substantial hurdles for remodeling and replacement projects, especially in older homes,” the association said in January. “Furthermore, NAHB is concerned that this rule is part of a broader agenda to phase out natural gas appliances, ultimately limiting consumer choice and driving up utility costs.”

DOE also said in February that it was developing a new energy efficiency category for natural gas tankless water heaters.

“Creating a new category for these popular and low-cost water heaters exempts these products from the Biden–Harris Administration’s onerous rules and gives the American people the power to choose the best option for their homes and budgets,” the department said.

Update: Moments ago, the Department of Health and Human Services released its plan to “save taxpayers $1.8 billion per year through a reduction in workforce of about 10,000 full-time employees as part of this latest transformation.”

HHS will “streamline the functions of the Department. Currently, the 28 divisions of the HHS contain many redundant units. The restructuring plan will consolidate them into 15 new divisions, including a new Administration for a Healthy America, or AHA, and will centralize core functions such as Human Resources, Information Technology, Procurement, External Affairs, and Policy. Regional offices will be reduced from 10 to 5,” the agency wrote in the press release. 

The overhaul is focused on HHS’s new priority: Ending America’s epidemic of chronic illness by focusing on safe, wholesome food, clean water, and the elimination of environmental toxins. 

HHS Secretary Robert F. Kennedy stated, “We aren’t just reducing bureaucratic sprawl. We are realigning the organization with its core mission and our new priorities in reversing the chronic disease epidemic,” adding, “This Department will do more – a lot more – at a lower cost to the taxpayer.”

*   *   * 

The Wall Street Journal has obtained documents indicating that Health and Human Services Secretary Robert F. Kennedy Jr. is preparing to announce large job cuts to overhaul the nation’s health agencies. The plan builds on broader cuts by the Trump administration and Elon Musk’s DOGE to reduce the size of the bloated federal government that has plundered taxpayer monies for far too long.

Kennedy plans to cut as many as 10,000 employees from the department, adding to the 10,000 who have already left through voluntary severance offers since President Trump took office. 

Documents reviewed by WSJ indicate that, when combined with voluntary departures, the planned cuts would reduce the department’s workforce by 25%—bringing it down to 62,000 federal health employees. The plan would also halve the number of regional offices from 10 to 5. 

WSJ provided more color on the cuts:

As part of the 10,000 workers to be let go, the Trump administration plans to cut: 3,500 full-time employees from the Food and Drug Administration—or about 19% of the agency’s workforce 2,400 employees from the Centers for Disease Control and Prevention—or about 18% of its workforce 1,200 employees from the National Institutes of Health—or about 6% of its workforce 300 employees from the Centers for Medicare and Medicaid Services—or about 4% of its workforce.

More broadly, the Trump administration’s cuts to the bloated federal government and unelected bureaucracy—often called the ‘shadow government‘—are beginning to filter through the jobs data (first here) with continuing jobless claims in Washington, D.C, now at their highest level since 2021 (now here).

Jobless claims continue to rise across Virginia, DC, and Maryland – an area also known as “Deep Tristate” – where federal workers live and play with free money from taxpayers… Now the party is over:

In addition to a softening labor market across the Deep Tristate, the D.C. housing market is being flooded with inventory (more MLS data here). 

Kennedy’s HHS cuts, set to be announced later today, add to the mounting headwinds for the Deep Tristate, as cracks emerge in both the labor and housing markets.