The political edge intensifies both at state and local levels of government with budget debates going to the brink of the deadline and Michigan lawmakers passing a colossal $78 billion state budget after several months of hostile budgetary negotiations, and federal worries grow over the deepening tensions between the White House and the Federal Reserve, which could disrupt the economy and jeopardize the independence of the various institutions.
Michigan legislators pass controversial budget
A new state budget is passed by lawmakers in the Michigan House of Representatives after several months of legislative debates, according to Yahoo News. The 78-billion-dollar roadmap has been a divisive issue in Lansing, with legislators unable to agree on a road funding plan. Lawmakers missed their deadline of July 1 to strike a deal. The bill was passed by 59 votes, and 45 others opposed the plan.
The Democratic plan in the Michigan Senate on its budget is not the same as the one in the Michigan House, with Republicans in charge. Their own budget was passed by state senators in May. A final plan will have to be agreed upon by both sides and sent to Michigan Gov. Gretchen Whitmer. In response to the same, House Speaker Matt Hall recently informed FOX 2 that Michigan state House Democrats lacked a sense of urgency at the negotiation table.
In February, the governor announced her original plan, which would add hundreds of new dollars per pupil to education funding. Months of standoff between the Michigan governor and the republican members of its state House have resulted in negotiations over a road funding agreement. The shutdown of the government is imminent.
White House and Fed tensions with each other intensify
In the meantime, the conflict between the White House and the Fed is increasing, which, as Mitrade says, leads to an increase in Gold. Gold price broke the barricade of the 3,400 per troy ounce barrier yesterday and rose even higher to a 5-week high, Commerzbank commodities analyst Carsten Fritsch observes.
Fed rate cut expectations are quoted as the cause of this in market reports. But these have not increased still higher in recent days. Fed Funds Futures still reflect an 85% chance that the Fed will cut the rate in September. Rate reductions of a little over 50 basis points are already priced in by the end of the year.
Fed independence is in jeopardy
Fed Governor Cook sued US President Trump in court over her sacking yesterday. This may result in a protracted court case in a number of courts. It is a question of the reputation and independence of the Fed. US Vice President Vance contributed to the flame of the dispute with the Fed.
The government, in his view, will not permit monetary policy decisions to be arrived at without the contribution of the people who are elected to serve the American people. That is, Vance is asking the US government to take a part in monetary policy.
The gold rush was caused by market panic
This would put a stop to free monetary policy. Gold is enjoying this confusion, evidenced by inflows into Gold ETFs of slightly less than 15 tons in the past two days. However, analysts are saying that the upside of Gold above 3,400 is becoming narrower. Of greater significance to the Gold price in recent years has been the growing war between the Fed and the White House.
The rising political polarities that state and federal budget negotiations reflect put the operations of government on the line, and the 78-billion-dollar Michigan budget dispute is just one manifestation of a larger governance problem as White House-Fed tensions erode institutional autonomy and fuel market fear, indicating systemic vulnerability to American democratic and economic stability.