Chairman Warsh has shown that he has steel in his spine by increasing interest rates seven weeks before the midterm elections.  Central bank independence is crucial for price stability, which in turn is crucial for long-term prosperity. President Trump is the greatest threat to Fed independence in modern history, going so far as to weaponise the criminal justice system against Fed officials in order to bend the committee to his desire for lower interest rates.  Chairman Warsh is now steward of this vitally important foundation of prosperity. He has shown he is up to the job.

Economic liberalism is not in vogue, to put it mildly. In the US, the energy in the Democratic Party lies with self-described democratic socialists who are critical of free markets. On the right, vice-president JD Vance argues that economic growth is overrated, economic science might be “fake,” and the bipartisan liberal consensus on economic policy has “failed” for the last four decades. Critics argue that liberalism has not delivered broad-based prosperity — an attack that can be convincingly defended against with statistics and quantitative analysis. But their critique goes further, asserting that liberalism is morally corrosive. This, too, is off base. For one, the free enterprise system pushes against the problematic tendency in American life to see people less as individuals and more as members of a group. The system is premised on the idea that society should accept the preferences, knowledge and decisions of individuals and families. This system argues that the welfare of society should be measured not by hazy perceptions of national greatness or by progress towards objectives set by elites, but instead by how well off individuals and families are — in their capacity as individuals and families. See my @FT column, below, for my full argument — including where I think anti-liberals are superficially right but deeply wrong.

0.2% monthly core CPI was right on the bubble. A lower print would have taken some pressure off the Fed. A higher print would have added to the pressure. But this did neither. Still, the Fed needs to hike rates. 0.2% monthly July core CPI is consistent with 3.3 percent annual July core PCE. Core PCE has been increasing for over a year. The unemployment rate has been low and stable for two years. Financial conditions are arguably easier than they were one year ago, and have been stable or falling over the summer. Great to be on @SquawkCNBC. Link in the next post.

"Mr. Strain said he generally agreed with much of the president’s 'general approach' in seeking to foster A.I., and that he believed the technology would benefit the economy and national security." "As Voters Grow Anxious Over A.I., Trump Shrugs Off the Concern," by @TonyRomm.