The Day Money Market Interest Hit 10%

The lending interest in the Money Market hit 10%.  This was not some anti-inflation movement in the 1980s.  It was just last month, September 2019.  It didn't last long and didn't get passed to consumers in their money market accounts.  It did send reverberations throughout the banking world.  Banks in the United States basically ran out of money.  The Federal Reserve of New York pumped $125 Billion into the system to restore liquidity.  

From the lack of headlines, you would think this is something which happens everyday.  It wasn't.  Banks don't usually run out of money.  $125 billion is still a lot of money.  It is the most the Feds have ever released in a quick,emergency fashion. 

The suggestions for going forward from this event are more concerning.  Historically, banks are only allowed to count money as cash reserves.  That is probably why they are called "cash reserves."  However, there is allegedly a movement afoot to allow banks to count bonds, specifically US Treasuries, as cash reserves.  That will allow banks to lend even more money than currently.  If people thought that the credit crisis of the late 2000s was bad, they haven't seen anything yet.  If banks are allowed to lend more based on holdings of Treasury bonds and then run into a cash crunch, the logical step will be to cash those bonds.  That puts the entire US deficit structure at risk.  It could make Treasury bonds near worthless or require the Treasury to put the printing presses on overdrive to pay off the debt.  

The United States government has never defaulted on Treasury bonds.  If the banks start counting them as cash, that day may come.          

Maine Plows Forward With Ranked Choice Voting

The Maine legislature voted to make it the first state in the United States to use ranked choice voting for presidential electors in general elections.  The 2020 election will be the first in which Maine voters will choose their presidential electors in order of preference.

In Maine's version of ranked choice voting, voters rank the candidates from the one they like best to the one they like least.  If no candidate gets more than 50% of the vote, the candidate with the lowest number of first ranked votes is eliminated and the totals of those voters second choices are counted as first choices in the vote totals.  This continues until one candidate gets more than 50% of first and second choice votes.

The hopes of proponents is that ranked choice voting will stop voting for the "lesser of two evils."  If somebody really thinks an independent or alternative party candidate is best, they can vote for that candidate as their first choice and the major party candidate as their second choice without worrying about "stealing" votes from the major party candidate.  In theory, there should also be more consensus, as sometimes a candidate who is the second choice of almost everyone will win over a candidate who is a plurality first choice of 30-40% of the voters.  For example, it is possible that Ross Perot might have won over Clinton and Bush in a ranked choice voting environment, rather than Clinton electors winning with only 43% of the popular vote.  It would have also solved the problem of 2000 Florida presidential election.  

A Conscious Conservative is watching this development.  Although there is guarded optimism, it is believed that Republicans and Democrats can develop a way to rig the ranked choice system also.  Maine is one of only two states that does not select a statewide slate of electors.  We will see if Maine selects any electors that are not pledged to the Republican or Democratic Party in 2020.