Blog Roll: The US Federal Reserve

 

Tuesday May 12, 2026 FrontLine PBS

The President vs. the Fed

President Trump's unprecedented challenges to the Federal Reserve and what it means for the economy; tracing the battle between Trump and the Fed as the central bank steers the economy through an increasingly precarious moment.

April 30, 2026 Why Powell decided to stay at the Fed. 

Jan 30, 2026 Trump Nominates Kevin M. Warsh to become the next Fed Chair and Paul Krugman thinks Warsh isn't qualified.

There are currently bills before the US Congress and Chapter 24 in Project 2025 (the Conservative Manifesto) calling for the US Federal Reserve to be abolished. Google AI Reports:

The following reasons are given:

These arguments can be debated. However, what interests me is the argument for more Federal Reserve Transparency and Automation and I have been posting on that topic:

• Trump vs. The Federal Reserve President Trump (and a lot of other politicians) want lower interest rates to stimulate investment. The Fed has been keeping interest rates above the Attractor path given Trump's erratic economic policies. And, there are lots of problems the Fed is facing in setting interest rates too low.
• What Impact is the Fed Having on the Dual Mandate? Some politicians argue the Fed has too much power but the data shows that Fed policy manipulations don't have major effects.
• Could the Fed be replaced by a Computer Program? No, but more automation, communication, public input and transparency would help (and could be a model for other Federal Agency reform).
• Four Regimes for Fed OS 1.0 The main problem with totally automating the Federal Reserve is what to do during Economic Crises. In addition to Business as Usual (BAU), three crises regimes can be identified statistically where human judgment is needed.
• Why does the Fed no longer try to control the Money Supply? It was found to be a weak policy variable and this post provides the data and a model.
• Project 2025 and the Federal Reserve An unbalanced collection of Wack-a-Doodle proposals from the far Right Wing.

Over time, I will have a lot more to say about Federal Reserve and automation of other Federal Government agencies. Given the dismal performance of the Trump II administration and the mistake of Big Tech for support of Right-Wing Agendas, it is time to start thinking out of the box!

Notes

• The Federal Reserve the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the Panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises.

Video

Blog Roll: The United States

 

The United States is facing a large number of problems right now. And, it does not appear that the Trump II Administration policies are addressed to solving any of them. Here are the problems and their interconnections as reported by ChatGPT (see the graphic below) 

Briefly, the Political System (top of the graphic below) has created economic, social, technological and geopolitical pressures that have led to declining state capacity. The arrows show reinforcing causal links that make the problems difficult to address.

Is the US in the Fifth Stage of Collapse as argued by the video above?

 

Results from the USL20 model (above) suggest that the US along with the World System (WL20 model) are to slow down and will reach a peak somewhere between 2040 and 2070.

A Blog Roll of my postings on the  US economy mostly using the USL20 model follows:

• Alternate Futures for the US The current administration (Trump II) envisions a Business-As-Usual future of unlimited, unstable exponential growth. A more realistic Geopolitical model would link the US to the World System.
• Trump Takes the US on a Random Walk The Future's Not Ours to See.
• Why MAGA Geopolitics? Recognition that the US is in collapse mode.
• US CO2 Emission Reductions Unlikely  The Trump II has done everything they can to disable Climate Policy and my forecasts are for CO2 emissions to stabilize at current levels (rather than be reduced) well past 2040.
• Why is Hardship Increasing in the US? Again, Business-as-usual (BAU) Policies of the Trump II do nothing to reduce hardship in the US.
• Geopolitical Linkages to Canada and Mexico. The Trump II administrations threatening policies toward North and South American countries are not facilitating a stable Geopolitical Environment. It would be better if North and South American countries found ways to link to the World System and benefit each other. US Hegemonic Leadership is not producing stability.
• US Inflation By Administration. The long-range attractor path predicts low levels of inflation for the US.
• US Unemployment. The attractor path for unemployment is expected to stabilize at around 9%, much higher than FED 2% targets.
• Alternate Forecasts for US CG Debt Debt is not out of control but that doesn't mean it won't keep increasing for a long time.
• Is the US in a Debt Crisis? The US has been in a Debt Crisis since 2010 (Debt significantly above the Attractor Path) but the future forecast is for peak-and-decline.

For the ULS203 Model, the primary state variables are:

US1 = (Overall Growth-Exports-Banks-CPU), US2 = Financial Markets (P.US.TBILL + P.CPAPER.  + P.FED.FUNDS. - Globalization), US3 = (L.US.U + GDP.X. +P.S.P.DPR + P.S. P.EPR. + P.FUELS. + Globalization - Q.H.Starts.) where  + P.S.P.DPR + P.S. P.EPR.= corporate performance. 

The ULS203 Model is nonlinear and unstable but only has one eigenvalue > 1.0-- it is essentially a moving average model. The USL20W Model (World Model) is also a moving average model but is linear and can be stabilized.

US Interconnected Problems

Blog Roll: Brazil

Jan 5, 2026. After the Invasion of Venezuela by the Trump Administration, Brazil lined up as one of the Latin American countries that condemned the attack (here). It was also one of the Latin American countries hit hard by Trump Tariffs.

Coffee is a good example (graphic above from Trading Economics). In 2025, Trump imposed tariffs on Brazilian coffee and prices in the super market begin to rise and Trump's approval ratings begin to decline. One November 20, 2025, Reuters reports (here) that Trump lifted the tariffs. Trump had been arguing that even though tariffs were taxes, they would be paid by the importers. That turned out not to be true (something Trump could have learned in ECON 101).

Here is a Blog Roll of my other postings on Brazil:

• Seven Futures for Brazil Alignment with the US or the other Latin American Countries (LAC) is best.

Boiler Plate

State Space Model Estimation

The Measurement Matrix for the state space models was constructed using Principal Components Analysis with standardized data from the World Development Indicators. The statistical analysis was conducted using an extension of the dse package. The package is currently supported by an online portal (here) and can be downloaded, with the R-programming language, for any personal computer here. Code for the state space Dynamic Component models (DCMs) is available on my Google drive (here) and referenced in each post.

Atlanta Fed Economy Now

My approach to forecasting is similar to the EconomyNow model used by the Atlanta Federal Reserve. Since the new Republican Administration is signaling that they would like to eliminate the Federal Reserve, the app might well not be available in the future.

While the app is still available, there have been some interesting developments. In earlier forecasts, the Atlanta Fed was showing GDP growth predictions outside the Blue Chip Consensus. Right now, after unorthodox economic policies from the Trump II Administration, the EconomyNow model is predicting a drastic drop in GDP (the Financial Forecast Center is only predicting a slight drop here).

Climate Change

Another comparison for what I have presented above are the IPCC Emission Scenarios. These scenarios are for the World System. Needless to say, (1) the new Right-Wing Republican administration plans on withdrawing the US from all attempts to study or ameliorate Climate Change and (2) the IPCC does not produce any RW models for the World System (but see my forecasts here).

World System

The longest running set of data we have for the World-System is the Maddison Project based on the work of Angus Maddison (more information is available here). Data on production (Q) and population (N) for most countries and regions runs from years 0-2000. More data becomes available as we near the year 2000. 

Available data were entered in a spreadsheet (see Population above, double click to enlarge). Missing data were interpolated with nonlinear spline smoothing using the R programming Language.

In cases where initial values were not available (see GDP above), the E-M Algorithm was used to estimate initial conditions.

From the graph of GDP above (W_Q) for the World System, it can be seen that economic growth from the year 0-1500 was basically flat. The period of British Capitalism (after 1500) had a small growth plateau. Takeoff does not happen until the Nineteenth Century.

From a system's perspective, the only model that can be tested for the entire period is Kenneth Boulding's Malthusian Systems Model [Q,N] = f[Q,N].

When developed as a State Space model (measurement matrix above) there are two components: W1=Growth and W2=(Q-N), the Malthusian Controller. When more data is available, the Malthusian Controller can be generalized to other SocioEconomic theories (see below).

What the Malthusian Controller shows (plotted as Q-N above) is that a long-developing Malthusian Crisis (Q<N) started in the Late Middle Ages and accelerated through the period of British Capitalism (Dark Satanic Mills) and was reversed spectacularly during the Nineteenth Century.  Takeoff in response to a deepening Malthusian Crisis would not be an unreasonable way to view Modern Economic Growth.

Error Correcting Controllers (ECC)

In another post (here), I presented Leibenstein's Malthusian Error Correcting Controller (ECC). It can be generalized to the dominant ECCs in most theoretical economic models (above). These controllers can be further generalized. For example, (X-U) and (L-U) can be generalized to (N-U), a more general Urbanization Controller which describes market expansion for economic growth. In countries and periods with limited data, (N-U) might subsume all these processes. ECCs describe important feedback processes in SocioTechnical System that are typically not recognized as such in academic literature.

Kaya Identity

The basic theoretical model underlying all the World-System models I create is the Kaya Identity. There are a number of advantages to starting theoretical development with the Kaya Identity: (1) An "identity" is true by definition. Adding other variables to the model ensure that theory construction is on a solid footing. (2) The Kaya Identity is also used as the foundation for the IPCC Emissions Scenarios allowing a linkage between World-Systems Theory and the work of the IPCC.

World Development Indicators (WDI)

After WWII, extensive data sets on all countries in the World-System became available from the World Bank (here). The indicators above were chose to construct the state space for each WDI-based model. Addition indicators can be added for specific forecasts and analyses.

Are Carbon Markets Back from the Dead?

 It was reported in the New York Times here that the Biden administration had been issuing new guidelines for carbon offsets and carbon markets. If you have been following Free Market ideas about  how to control Climate Change you might have concluded that Carbon Markets were exposed as Greenwashing designed in the marketing departments of Big Businesses. But, the proposals are back again from the dead, being pushed by the Biden administration in an election year.  What gives? And, will these ideas be supported by the Trump Administration (HINT: only if they make money again for Big Business)?