GovMoneyNews -- July 10, 2025
Do pennies still matter? Does inflation lead to political success for "right" or "left" politicians? What valuable inflation insights did a 16th-century Jesuit scholar leave us?
Today’s Top Three Reads include an article at Wolf Street chronicling a declining role for the dollar as a reserve currency, an article at Barron’s raising concern how inflation has been undermining real wages in the labor market, and an article at Jacobin identifying “the cost of living crisis facing working people” as a factor in the political rise of Zohran Mamdani in New York City.
This daily newsletter gathers news and opinion about government finance and financial markets. My name is Bill Bergman. You can reach me at billbergman34@gmail.com
TOP THREE READS
Wolf Street
The (declining) status of the dollar as global reserve currency
From July 9, by Wolf Richter, includes “The dollar’s status as dominant foreign exchange-reserve currency has been diminishing for years as central banks have been diversifying to other currencies and over the past three years massively into gold. The decline of the dollar has been slow and halting, a couple of steps forward, one step back, sometimes bigger steps, other times smaller steps, and it remains by far the dominant global reserve currency. But the long-term trend is clear – and this has significant long-term consequences for the US.”
Barron’s
Inflation is eating the labor market. Gains are a mirage
From July 9, by Ali Bustamante, includes “For much of the last three years, we have heard a reassuring story about the U.S. labor market: It was tight, hot, even historically strong. Policymakers pointed to low unemployment and high job openings as evidence that workers had healthy bargaining power. … Yet, beneath the rosy narrative lies an uncomfortable truth: Real wages have been falling. … For decades, economists relied on models built for a world of low, stable inflation. They treated indicators like the vacancy-to-unemployment ratio as a reliable gauge to labor slack in the labor market. But in recent years, these indicators haven’t worked as expected. …”
Jacobin
Red-baiting Zohran Mamdani won’t work
From July 7, by Ben Burgis, includes “No one should be surprised that Zohran Mamdani supports democratic control over the economy, the end goal of socialism. But he won because he combined socialist politics with practical solutions to the cost-of-living crisis facing working people. … A socialist advocating the socialization of the means of production should be exactly as surprising as a libertarian advocating “liberty” from economic redistribution or a conservative calling to conserve the status quo. This is socialism’s core defining proposition, and it is a mark of how alien many of the ideas of the Left are to the media class that Mamdani’s comments have come as a surprise.”
FEDERAL GOVERNMENT FINANCES
The Gazette
From July 9, by Mike Sunnucks, includes “Current inflation rates are well off the nearly double-digit price hikes in 2022 after all the fiscal and monetary infusions to keep market economies and financial markets afloat during the shutdowns and turmoil of the pandemic. President Donald Trump has touted the easing government inflation figures, noting his tariffs have not pushed prices as warned. “Inflation is down,” Trump has proclaimed. But are prices and the cost of living really down? Other economic data and views from the frontlines of the economy and household finances paint a different, more difficult picture for many American households and small businesses.”
AInvest
The Fed rate cut gamble: Can Trump’s $900 billion debt savings promise survive reality?
From July 9, by Cyrus Cole, includes “The political theater surrounding the Federal Reserve's interest rate decisions has rarely been more charged. President Donald Trump's relentless demands for a 3-percentage-point rate cut—aimed at slashing U.S. government debt costs by $900 billion annually—have sparked heated debates about fiscal strategy, central bank independence, and market mechanics. … Trump's $900B promise is a political fantasy, not a fiscal blueprint. For investors, the lesson is clear: - Avoid Long-Term Bonds: Their yields may rise as markets test the Fed's independence. - Monitor Inflation Metrics: A resurgence in prices could negate any rate-cut benefits.- Advocate for Fiscal Prudence: Without spending control, even ideal rate scenarios won't stabilize debt costs.” (Note: See “FROM THE VAULTS” below.)
The Hill
Why we should stop worrying and learn to love the national debt
From July 9, by Yeva Nersisyan and L. Randall Wray, includes “The discourse around the national debt likens the government to a private-sector entity that can be forced into default by its creditors. But the U.S. government is not like a family or a business — it cannot default on debt denominated in dollars, since it is the issuer of dollars. Although our government can choose not to pay its bills — by, for instance, refusing to raise the artificially imposed debt ceiling — it technically can never run out of money to pay bondholders. As former Federal Reserve Board Chair Alan Greenspan rightly recognized: “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.” …”
STATE AND LOCAL GOVERNMENT FINANCES
The Wall Street Journal
We’ll all pay for New York’s Mamdani folly
From July 9, by Bennett Nuss, includes “… In short, Mr. Mamdani presents a real economic threat to residents of the five boroughs and their upstate neighbors—and even to the economic well-being of the entire country. Every dollar spent to bail the Big Apple out of a socialist experiment is a dollar that could be spent fruitfully elsewhere. Let’s hope New Yorkers come to their senses and avert a disaster before it happens.”
Politico
Zohran Mamdani leads general election poll for NYC mayor
From July 9, by Jeff Coltin, includes “Democratic nominee Zohran Mamdani holds a 10 point lead over Andrew Cuomo in New York City’s general election for mayor, while incumbent Mayor Eric Adams trails in fourth place behind Republican nominee Curtis Sliwa, according to a new poll. Mamdani gets support from 35 percent of registered voters, followed by Cuomo with 25, Sliwa with 14, Adams at 11 and attorney Jim Walden at 1 percent.”
The Chicago Contrarian
In Chicago politics, who is the real sucker?
From May 13, by George Shay, includes “… A newly formed political action committee, the Common Ground Collective, has raised more than $10 million to take on Johnson and the Democratic Socialist machine he rode into office. … The same critics now pearl-clutching about the Common Ground Collective had no problem when the Chicago Teachers Union (CTU) spent millions bankrolling Johnson’s mayoral campaign — and then wrote themselves into the city budget. They weren’t worried about dark money when union cash-backed slates of rubber-stamp aldermen who can’t tell you the difference between a capital budget and a cafeteria menu. … And for the first time in a long time, the progressive monopoly on that power is under threat.”
BANKING AND FINANCIAL REGULATION
Mises Institute
The fallacy of ‘measuring’ inflation
From July 9, by Patrick Carroll, includes “… According to the Oxford Advanced Learner’s Dictionary, to measure something means “to find the size, quantity, etc. of something in standard units.” … Central to the concept of measurement is the concept of a fixed, universally recognized unit. … When statisticians generate the CPI or PPI, they are not taking out the economic equivalent of a ruler and measuring something. They are simply manipulating data according to a set of arbitrary procedures. … I’d like to offer up a term that I think should be considered as the replacement: quantify. Calculating the CPI, PPI, and so on should be regarded, not as measuring inflation, but as mere attempts to quantify inflation. The merit of the word quantify is that it is more abstract, and thus more humble. It does not imply that we are ascertaining an objective metric. …”
Israel365 News
US to stop producing pennies, heralding a pre-Messiah economy
From July 10, by Adam Eliyahu Berkowitz, includes “After more than two centuries of use, the United States will officially stop minting the penny in 2026, bringing an end to a coin that has long outlived its economic utility. The decision, announced by the U.S. Mint and supported by the Treasury Department, comes amid growing concerns over rising production costs and the changing nature of financial transactions in the digital age. The penny—first authorized in 1792 and produced in its original large copper form in 1787—has become increasingly obsolete. Today’s penny is a small, copper-plated zinc coin, but inflation has eroded its value to the point of near irrelevance.”
American Institute for Economic Research
The penny problem has a third option: Buy them back (with interest)
From July 9, by Michael Munger, includes “… it cost the US Mint about 3.7 cents to produce a single one-cent coin. In other words, we immediately lost more than two cents on every penny we make. … This may sound ridiculous, but I’m serious: instead of making brand-new pennies, what if the government simply bought back some of the 114 billion pennies already floating around in drawers, jars, and couch cushions across America? Think about it. The vast majority of those pennies aren’t being used in everyday transactions, or even every year transactions. They’re collecting dust. But what if the government offered, say, 1.5 cents for every penny returned? That’s “more than the coin is worth” — so people would have an incentive to dig them out — and it’s still far cheaper than making new ones.” (Note: See “FROM THE VAULTS” below)
FROM THE VAULTS
Econlib
Money, kings, and Juan de Mariana
By Chris Loukas, includes “I would like to talk about Juan de Mariana’s “On the Coinage,” an essay by a 16th century Spanish Scholastic. … Regarding the debasement of currency by mixing gold and silver coins with copper, he says: ‘I have always typically thought of those men who promise to transform metals by some magical method – to make silver out of bronze and gold out of silver – as being the most untrustworthy sort, like itinerant snake oil salesmen.’ … Mariana makes another interesting observation based on his theory of natural rights. As the king has no justification to mess with his citizens’ property or establish taxes without their consent, the same applies to inflation … ‘I would like to give princes one last piece of advice: if you want your state to be a healthy one, do not touch the primary foundations of commerce – units of weight, measurement, and the coinage. A many-layered swindle lies hidden behind the appearance of a quick fix.’ …”
Forbes
A Jesuit And President Milei agree: Inflation is plunder
From July 2024, by Alejandro Chafuen, includes “For starters, both Milei and Mariana admonish monetary authorities that the central bank has no domain over the people's goods and cannot take them either in whole or in part. Would it be licit for the president of a country and his subservient bureaucrats to go into a barn, take half the wheat for themselves, and try to satisfy the owner by saying that he can sell the rest at twice the price? I do not think anyone would approve of this, yet this is precisely what is done when monetary authorities expand the money supply. … Modifications in money cause great confusion, but it often seems as though governments are willfully ignorant in this regard. It is easy to understand that this arbitrary method of printing money can be advantageous in the short run for the government to pay its expenses, and it has been used many times.”