Originally published on Substack. 

​This week reinforced a lesson that cuts across nearly every policy debate in America:
​
People work better than government.

That may sound obvious, but it’s amazing how often policymakers forget it.

Whether the topic is poverty, jobs, housing, taxes, budgets, or inflation, the instinct in Washington and many state capitals is often the same: create another program, spend more money, or expand government authority. Yet the evidence continues to point in the opposite direction.

Take economic mobility. In my recent article for The Daily Economy⁠, later republished by RealClearMarkets⁠, I challenged the myth that America has a permanent underclass trapped in poverty.

The reality is that most people move through income brackets over their lifetimes as they gain skills, build careers, start businesses, and accumulate wealth. The goal of public policy shouldn’t be managing outcomes—it should be expanding opportunities.
​
The same principle showed up in the latest U.S. jobs report.

​While headlines celebrated job growth, my analysis found much of the increase came from government and government-dependent sectors. A bigger government payroll is not the same thing as a stronger economy. Lasting prosperity comes from productive private-sector growth, entrepreneurship, investment, and innovation. That’s where rising living standards come from, not government expansion.
​
Housing affordability tells a similar story. In my recent RealClearMarkets commentary⁠, I argued that America’s affordability challenges stem largely from supply constraints.

​Too many policymakers focus on restricting growth instead of expanding supply. Whether it’s housing, energy, water, or data centers, abundance—not scarcity—is the path to lower prices and greater opportunity.
​
The question of ownership remains central as well. In my latest property tax work, including Wyoming’s path toward property tax relief⁠, I continued making the case that if government can tax your property forever, ownership is incomplete.

Families should own their homes, not rent them from government through perpetual taxation. The solution starts with spending restraint and using surpluses to reduce and ultimately eliminate property taxes.
​
That same spending restraint is at the heart of the Sustainable Budget Project. Whether examining Alabama’s $18,000 spending problem⁠ or Alaska’s resource trap⁠, the lesson remains remarkably consistent: government spending that grows faster than population growth plus inflation eventually leads to higher taxes, slower growth, and fewer opportunities.

They’re largely the result of inflation, Federal Reserve policy, rising funding costs, and increased lending risks. When policymakers abandon fiscal discipline, families eventually pay the price.
​
One of the highlights of the week was seeing my work published internationally through the Instituto de Liberdade Econômica⁠, where I made the case that free-market capitalism remains the greatest engine of prosperity ever discovered.

No economic system has done more to lift people out of poverty, improve living standards, and expand opportunity.
​
My economic episode this week was on how government failures hurt our ability to prosper in many ways.

Across all these issues, the lesson is the same. Economic mobility requires opportunity. Housing affordability requires abundance. Ownership requires property rights. Growth requires entrepreneurship. Prosperity requires freedom.

Government has an important role, but it cannot replace families, businesses, churches, charities, and communities. Those institutions remain the real engines of human flourishing.

The more we trust people, the more they prosper. And that’s exactly what public policy should be designed to achieve.

Affordability remains one of the biggest challenges facing American families.

While inflation has come down from its peak, prices remain far higher than they were just a few years ago. Housing costs are elevated, insurance premiums continue rising, groceries cost more, and many households are relying on credit cards simply to make ends meet.
​
The result is a troubling milestone: Americans now carry a record $1.25 trillion in credit-card debt, according to the Federal Reserve Bank of New York.

A recent Wall Street Journal article, “Americans Are Falling Behind on Their $1.25 Trillion Credit-Card Bill,” highlighted the growing financial stress facing households across the country. The article documented the problem well, but I believe it missed an important part of the story.

Too often, higher credit-card interest rates are blamed on banks. But banks do not operate in a vacuum. Interest rates throughout the economy are heavily influenced by Federal Reserve policy, and lenders must account for both their cost of funds and the risk of lending.

In short, the rise in credit-card rates is largely a consequence of inflation, monetary policy, and increasing delinquency rates—not simply the actions of banks.

I submitted the following letter to the WSJ editor in response (WSJ couldn’t use it).

Letter to the Editor

Your article, “Americans Are Falling Behind on Their $1.25 Trillion Credit-Card Bill,” highlights the financial stress many households face but misses a key reason credit-card interest rates have risen so sharply: Federal Reserve policy.

Credit-card rates are typically tied to the prime rate, which closely follows the federal funds rate set by the Fed. As the central bank raised interest rates to combat the inflation created after years of excessive monetary expansion, borrowing costs increased throughout the economy. Credit-card rates rose with them.

Banks are not arbitrarily charging higher rates. They must price credit according to their cost of funds and the risk of lending. Rising delinquency rates and higher funding costs have made unsecured consumer lending more expensive.

Blaming banks for higher credit-card rates confuses cause and effect. The real story is that inflation and aggressive monetary tightening have left Americans paying more to borrow. If policymakers want lower borrowing costs, they should focus on restoring sound money and price stability rather than attacking lenders that are responding to market conditions.

Vance Ginn
Round Rock, Texas

What Policymakers Should Learn

The growing burden of credit-card debt is not merely a consumer finance story. It is a reminder that bad fiscal and monetary policy eventually reaches kitchen tables across America.

When Congress spends too much, deficits grow. The Federal Reserve often monetizes some or all of the deficit leading to inflation. The Fed often tries to clean up the mess from government failures. Families then pay the price through higher prices, higher interest rates, or both.

If we want Americans to have more opportunity to build wealth and less need to rely on debt, policymakers should focus on the root causes.

Three Takeaways for Policymakers

1. Sound money matters.

Price stability is essential for long-term prosperity. Inflation acts as a hidden tax that disproportionately hurts working families and those living paycheck to paycheck.

2. Fiscal restraint supports affordability.

Federal spending should grow no faster than population growth plus inflation. Excessive government spending contributes to inflationary pressures that ultimately make life more expensive.

3. Focus on causes, not scapegoats.

Higher borrowing costs are often the result of broader economic conditions, not simply the decisions of lenders responding to market signals.

The Bottom Line

Americans are struggling with affordability, and many are turning to credit cards to bridge the gap. But blaming banks for higher interest rates misses the bigger picture.

The real challenge is restoring the conditions that allow families to prosper: sound money, responsible budgeting, lower inflation, stronger economic growth, and greater opportunities to build wealth.

If we want lower borrowing costs tomorrow, we need better fiscal and monetary policy today.

Originally published on Substack.

​My work this week kept coming back to one theme: government keeps finding new ways to trap people.

Property taxes trap homeowners in perpetual payments to government. Exit taxes try to trap residents in failing states. Regulatory barriers threaten to trap innovation before it can grow. Bloated state budgets trap taxpayers with rising future burdens. And the Fed’s oversized balance sheet traps markets in a cycle of distortion and dependency.

Different issues. Same root problem.
Government grows, taxpayers pay, markets distort, and freedom shrinks.

That is why spending restraint, property rights, sound money, and economic freedom are not abstract ideas. They are the difference between owning your home or renting from government, moving freely or being punished for leaving, building the future or regulating it away, and saving in dollars that hold value or dollars that keep losing purchasing power.

Here’s the week’s breakdown.

Stop Renting From Government

A property tax revolt is building across America, and it is overdue.

You can pay off your mortgage, maintain your home, insure it, improve it, and still receive a government bill every year just to keep what you already own. Miss enough payments, and the government can ultimately take the property.

That is not true ownership.

That is renting from the government forever.

This is why states such as Florida, Texas, Wyoming, Nebraska, Iowa, Montana, and others are debating property tax relief or elimination. But too many proposals still miss the core point: property taxes are primarily a spending problem.

My latest piece, Stop Renting From the Government: Consider Wyoming, builds on my new Wyoming brief showing that the state spent roughly $4 billion above a population-growth-plus-inflation benchmark from FY 2017 to FY 2025 while building major reserves. The fiscal capacity for meaningful relief exists. What’s missing is the political discipline to restrain spending and return surplus dollars to taxpayers.

That same principle drives my new national report, Securing Ownership by Eliminating Property Taxes, which uses Montana as a case study. Montana is especially important because it has no broad statewide sales tax, yet spending has still outpaced sustainable limits. That proves the problem is not a lack of revenue. The problem is government spending too much.

Homestead exemptions, assessment caps, targeted rebates, and one-time checks may sound good politically, but they mostly shift burdens and leave the spending machine untouched. The better path is strict state and local spending limits tied to population growth plus inflation, surplus-driven rate compression, school finance reform, and constitutional taxpayer protections.

Read the Wyoming piece here, the Montana framework here, and share the Wyoming property tax thread on X.

Let AI Build

AI infrastructure is not abstract.

It needs land, power, fiber, water, transmission, and data centers on the ground. Kansas can either welcome that opportunity with light-touch rules and fast permitting, or it can let local zoning, regulatory uncertainty, and political fear hand the future to larger, politically connected firms that can afford the compliance costs.

In my piece for Kansas Policy Institute, Kansas Should Welcome AI Growth, Not Zone It Away, I argue that Kansas does not need subsidies or corporate welfare to benefit from AI infrastructure. It needs predictable, market-driven rules that let builders build, communities benefit, and competition work.

Regulatory bottlenecks rarely protect the little guy. More often, they protect incumbents by raising the cost of entry.

The AI economy will not wait for states to get comfortable. The infrastructure will be built somewhere. The question is whether Kansas and other states want more opportunity, investment, tax base, and energy innovation, or whether they want to regulate the future away.

Exit Taxes Admit Failure

When people and capital leave high-tax states, politicians have two choices.

They can reform the policies that drove people away, or they can punish people for leaving.

Too many are choosing the second option.

In my latest piece for AIER, Exit Taxes Won’t Save Failing States, I argue that exit taxes are not serious fiscal policy. They are a confession of failure.

Economic freedom means people can move to where they are treated best. Families leave when taxes are too high, housing is too expensive, regulation is too heavy, crime is too high, or opportunity is better elsewhere. Businesses move when the policy environment becomes hostile to investment, hiring, and growth.

The right response is not to trap people.

The right response is to compete for them.

Flatten taxes. Restrain spending. Reduce red tape. Protect property rights. Make the state worth staying in.

Exit taxes are the policy equivalent of a bad business charging customers a fee to stop shopping there.

Texas Needs Accountability

Episode 200 of the Let People Prosper Show is here, and we did not spend it on a highlight reel.

I sat down with Jeramy Kitchen, president of Texas Policy Research, for a serious conversation on whether the “Texas Miracle” still matches reality. We talked about rising government spending, persistent property tax pain, school finance, corporate welfare, and the need for real accountability in a state that too often relies on branding instead of restraint.

Texas still has enormous advantages: no personal income tax, a dynamic economy, energy abundance, entrepreneurship, and a strong culture of work. But those advantages must be protected. A reputation for freedom is not self-executing.

The state has to earn it every session.

That means real spending restraint, property tax elimination through surplus-driven compression, broader school choice, less corporate welfare, and more respect for taxpayers.

You can listen to Episode 200 on Apple Podcasts, watch it on YouTube, and share the episode thread on X.

Shrink the Fed

With Kevin Warsh now sworn in as Federal Reserve Chair, the moment demands more than rate talk.

The deeper issue is the Fed’s balance sheet, which remains far too large and continues to distort markets, punish savers, reward leverage, and enable congressional fiscal recklessness.

In Kevin Warsh’s Fed Moment, I argue that real monetary reform should mean a rules-based framework for price stability, a path toward a 0 percent inflation target, and a dramatically smaller balance sheet. My North Star is a Fed balance sheet capped near 6 percent of GDP, compared with roughly 20 percent today, until it can be eliminated.

That means letting short-term assets mature without rolling them over, exiting mortgage-backed securities, and returning the Fed to a narrow lender-of-last-resort role until we can ultimately move beyond central banking altogether.

This connects directly to property taxes, exit taxes, and state spending. When government grows faster than the productive economy, people pay through higher taxes, higher prices, distorted markets, trapped mobility, and weaker prosperity.

Sound money and spending restraint go together.

The Bottom Line

This week’s lesson is clear: government is too often trying to trap people.

Property taxes trap homeowners in perpetual payments. Exit taxes try to trap residents geographically. Regulatory barriers trap innovation. Monetary distortions trap markets in dependency. Excessive spending traps taxpayers with rising future burdens.

The answer is not better central planning.

The answer is to constrain government, protect property rights, restore sound money, and let free people and markets allocate resources better than politicians ever can.

That is how we let people prosper.

Five Takeaways for Policymakers

1. Property tax relief without spending limits is cosmetic.

States should enact binding expenditure limits tied to population growth plus inflation, use surpluses for rate compression, and protect taxpayers constitutionally.

2. Exit taxes signal failure.

If people are leaving, fix the tax, spending, regulatory, and public safety problems that pushed them out.

3. AI infrastructure needs permission to grow.

States should streamline permitting, avoid subsidies, reject local regulatory choke points, and let competition work.

4. The Fed’s size matters as much as rates.

A bloated balance sheet distorts markets and enables fiscal recklessness. Rules-based reform and balance-sheet reduction should be central.

5. Texas and every other state must earn their reputation daily.

Prioritize taxpayers over cronies, transparency over branding, and spending restraint over expansion.

Join the Conversation

Thank you for reading and sharing this work. If this added value, please forward it to a policymaker, staffer, journalist, homeowner, business owner, or friend who cares about ownership, mobility, sound money, and prosperity.

I’d especially like to hear from you: What is the best path to eliminating property taxes in your state?
​
Drop your thoughts in the comments, share this post with someone who should read it, and follow me on X for real-time updates.

Originally published on Substack. 

​Kevin Warsh has now been sworn in as Federal Reserve Chair, and the timing could not be more important.

Inflation remains a threat. Federal debt keeps rising. The Fed’s balance sheet is still massive. Markets are watching whether Washington will keep using monetary policy to paper over fiscal excess or finally restore discipline.
​
Warsh has said many of the right things for years. In his Hoover Institution interview, he argued that the Fed has drifted from its core mandate of price stability, warned about the legacy of quantitative easing, and criticized the central bank’s growing entanglement with fiscal policy. That is exactly the right diagnosis.

Now comes the real test.

Will the Warsh Fed simply manage the same broken framework a little better? Or will it begin the hard work of shrinking the Fed’s footprint, restoring sound money, and ending the central bank’s role as Washington’s fiscal shock absorber?

Inflation Is A Choice

Warsh has been blunt: inflation is not a mystery. It is not a weather pattern. It is a policy outcome.

That matters because too much of Washington still treats inflation as something that happens to policymakers, rather than something policymakers help create. Supply shocks can raise certain prices. Energy disruptions can matter. Wars can matter.

But persistent inflation comes from too much money chasing too few goods and services, often after Congress spends too much and the Fed accommodates it.

This is why I have argued in The Fed’s Latest Move Shows Why the System Must Change and Rules Over Discretion Provide A Path Forward that the Fed needs rules, not vibes. Discretion has given us mission creep, massive asset purchases, distorted markets, and inflationary finance.

The current Fed framework targets 2 percent inflation, but that is not true price stability. It means the dollar loses purchasing power every year by design. A serious reform agenda should move toward a 0 percent inflation target. The goal should be a stable dollar, not a dollar that steadily melts slower than before.

The Balance Sheet Is The Real Story

The Fed’s balance sheet is where the regime change must begin.
​
According to FRED’s WALCL series, the Fed held about $6.714 trillion in total assets as of May 20, 2026

Nominal GDP was about $31.856 trillion in Q1 2026. That means the Fed balance sheet is roughly 21 percent of GDP. Before the 2008 policy crisis, the Fed’s balance sheet was 6 percent of GDP.

My North Star is clear: cap the Fed balance sheet at 6 percent of GDP (maybe lower?) and shrink it steadily until it gets there.
At today’s GDP, 6 percent would be $1.9 trillion. That means the Fed would need to shrink by roughly $4.8 trillion from today’s level. That is not a small adjustment. But it is necessary.

A central bank with a balance sheet above 20 percent of GDP is not merely a lender of last resort. It is a market-maker, fiscal enabler, and interest-rate manipulator. It pushes capital toward government debt, distorts risk pricing, rewards leverage, punishes savers, and allows Congress to avoid the consequences of overspending.

That is not neutral monetary policy. That is central planning through the bond market.

How To Shrink It

The Warsh Fed should announce a simple path.

First, stop reinvesting maturing assets. Let short-term Treasuries mature and do not roll them over.

Second, stop holding mortgage-backed securities. Housing finance should not be managed by the central bank.

Third, move the portfolio toward short-term Treasury bills during the transition, then continue shrinking as those mature.
Fourth, publish a schedule that gets the balance sheet to 6 percent of GDP (lower?) within a defined window, with emergency deviations allowed only through transparent congressional authorization.

Fifth, pair the balance sheet rule with a 0 percent inflation target.

That would be a real dual rule: stable money and a shrinking central bank footprint.

Yes, interest rates will likely rise as the Fed stops suppressing them. That is not a flaw. That is the market finally being allowed to speak. Artificially low rates feel good at first, but they create malinvestment, debt addiction, asset bubbles, and inflationary pressure. The medicine is uncomfortable because the disease has been allowed to spread for too long.

Congress Must Stop Feeding The Fed

But the Fed cannot fix Washington’s spending addiction.

The CBO’s latest outlook projects a $1.9 trillion deficit in 2026, rising to $3.1 trillion by 2036. The deficit is projected to grow from 5.8 percent of GDP to 6.7 percent, while debt help by the public rises to 120 percent of GDP by 2036. That is the real source of pressure on the Fed.

There is growing support for a 3 percent of GDP annual deficit target. That would be better than today’s reckless path, but let’s be honest: it is not enough. A 3 percent deficit is still a deficit. It still adds debt. It still assumes Washington should permanently spend more than it collects. It still leaves future taxpayers holding the bag.

The real goal should be a 0 percent deficit with spending less and restraint as the focus.

That means Congress should adopt a sustainable budgeting rule that limits federal spending growth to no more than population growth plus inflation, as I explain in my Sustainable Budgeting for a More Prosperous Economy guide. The problem is not that Americans are undertaxed. The problem is that Washington spends too much.

Spending is the disease. Deficits, debt, inflation, and Fed intervention are symptoms.

Back To Lender Of Last Resort

The Fed should not be an unelected economic czar.

It should not manage climate policy. It should not allocate credit. It should not subsidize housing. It should not rescue Congress from the consequences of overspending. It should not manipulate the yield curve to make debt cheaper than markets would otherwise allow.

At most, while the Fed exists, it should be a narrow lender of last resort for solvent institutions during genuine liquidity crises, following clear rules and transparent limits.

And yes, my long-run North Star remains ending the Fed. There is no need for a central bank to manage a free economy. Money should be sound, markets should set interest rates, and Congress should not have a monetary escape hatch for fiscal irresponsibility.

But as long as the Fed exists, it must be constrained.

That is why my Finance Policy Guide calls for ending the Fed’s role as an unelected economic czar, capping the balance sheet at 6 percent of GDP, banning non-Treasury debt monetization, moving to rules-based policy, and requiring a full independent audit.

Warsh has an opening to move in that direction.

Three Takeaways For Policymakers

1. Make price stability mean 0 percent inflation.

The Fed’s 2 percent target still erodes purchasing power. A stable dollar should be the goal, not slower monetary decay.

2. Cap the Fed balance sheet at 6 percent of GDP.

At roughly 21 percent of GDP today, the Fed’s balance sheet is far too large. Let assets mature, stop reinvestment, end MBS holdings, and shrink toward a narrow lender-of-last-resort role.

3. Fix Congress’s spending problem.

A 3 percent deficit target is better than the current path, but the right goal is balance. Spending should grow no faster than population growth plus inflation, and preferably less.

The Bottom Line

Kevin Warsh has said the Fed needs reform. Now he has the chair.

The task is not to manage the old system more politely. The task is to change the regime.

Shrink the balance sheet. Target 0 percent inflation. Stop enabling Congress. Let interest rates reflect real market conditions. Restore the Fed to a narrow lender-of-last-resort role until the country is ready to eliminate it altogether.

Sound money is not optional. It is the foundation of affordability, investment, savings, and liberty.

Originally published on Substack. 

The Senate Banking Committee is scheduled to mark up the Digital Asset Market Clarity Act on Thursday, and the fight over stablecoin “yield” is exposing a much bigger problem than crypto policy.

This is really about whether Washington will allow real competition in money and banking or keep doing what it always does: overregulate one group, carve out another, and call the result innovation.

Stablecoins are digital tokens designed to hold a stable value, often one dollar. Used well, they can make payments faster, cheaper, and more competitive. That matters. Families, businesses, and entrepreneurs should have access to better payment tools. The government should not stand in the way of useful innovation.

But the question before Congress is not whether stablecoins should exist. They should. The question is whether stablecoins are payment tools or deposit substitutes. That distinction matters.

Think of it this way: a prepaid debit card and a savings account are not the same product. One is mainly for payments. The other is for storing money and earning a return. A stablecoin used to move money quickly is like the first. A stablecoin that pays people to hold balances starts looking like the second.

The yield fight is a banking fight

The bill’s section-by-section summary says Section 404 would prohibit passive, deposit-like interest or yield on payment stablecoin balances while allowing “bona fide activity or transaction-based rewards” under future joint rules from the SEC, CFTC, and Treasury.

That sounds like a reasonable compromise. It may be. But the words matter. If “transaction rewards” become a backdoor way to pay people for holding balances, then Congress has not banned yield. It has merely asked lawyers to rename it.

That is why banking groups are warning that reward structures tied to balances, account tenure, or recurring activity could function like interest even if they are not called interest. Their joint letter argues that incentives acting like yield can reduce deposits and, in turn, reduce banks’ ability to lend.

They are right about the risk. But they are wrong if their answer is permanent protection from competition.

Banking is overregulated. That is the first distortion.

Community banks are not the enemy. They fund small businesses, farms, homebuilders, and families through local relationship lending. The ICBA estimates community banks hold $4.8 trillion in deposits supporting $4 trillion in lending, make 60 percent of small-business loans under $1 million, and provide 80 percent of agricultural lending.

Those institutions matter.

But they have also been buried under federal rules. Dodd-Frank, capital mandates, compliance costs, anti-money-laundering complexity, supervisory uncertainty, and the Federal Reserve’s constant manipulation of money and credit have distorted banking for years. Washington tied weights around banks’ ankles and now acts shocked when deposits look for a faster lane.

The free-market answer is not to put identical weights on stablecoins. The answer is to take the weights off banks.

Milton Friedman warned that policies should be judged by their results, not intentions. The intention behind digital-asset legislation may be clarity and innovation. Good. But if the result is a special lane for stablecoin platforms while community banks remain trapped in a regulatory cage, then Washington is not creating free markets. It is picking winners.

The CEA asked the wrong question

The White House Council of Economic Advisers tried to minimize the issue with a stablecoin-yield report estimating that banning yield would increase bank lending by only $2.1 billion and impose an $800 million welfare cost.

That sounds precise. But precision is not wisdom.

The real issue is not what happens if yield is banned in today’s young market. The issue is what happens if Congress normalizes stablecoins under a national framework and allows yield-like products to scale. Today’s stablecoin market is the starting line, not the finish line.

That is why I argued in RealClearMarkets that the CEA modeled the wrong baseline. Estimating the effect from today’s market is like estimating highway traffic by counting cars on a dirt road before the highway is built.

The whole point of CLARITY is to build the highway.

Don’t confuse freedom with favoritism

Crypto advocates say banning yield limits consumer choice. They have a point. Consumers should have better options and better returns. We need more competition in money, banking, payments, and credit.

But competition should come from better products, lower costs, stronger disclosure, and freer entry, not from one sector receiving a softer rulebook while another remains stuck under decades of federal micromanagement.

There are two coherent paths.

First, keep payment stablecoins in the payments lane. Let them compete on speed, cost, access, reliability, and programmability. But close loopholes that let issuers, exchanges, affiliates, brokers, or platforms disguise deposit-like interest as “rewards.”

Second, and better, deregulate banks so they can compete too. Let banks pay better returns. Let community banks innovate. Reduce compliance burdens. End the regulatory favoritism that protects the biggest institutions while squeezing smaller lenders.

The worst option is what Washington usually chooses: regulate one group too much, another group too little, and pretend the imbalance is the market.

It is not.

The bigger problem is government money

The deeper issue is that government has far too much control over money and banking in the first place.

In a truly free system, Americans would choose among competing currencies and payment systems. Banks, stablecoin issuers, credit unions, fintech firms, and decentralized tools would compete for trust. Fraud would be punished. Contracts would be enforced. Property rights would be protected. But the government would not micromanage money and credit from the top down.

There should be no central bank manipulating interest rates, rescuing favored institutions, and distorting capital allocation. The Federal Reserve has helped create cycles of cheap money, inflation, bailouts, and instability. Then Washington uses the chaos as an excuse for more control.

That is not capitalism. That is managed finance.

Stablecoins are interesting because they can create more competition. But Congress should not turn them into another government-shaped privilege. Financial freedom means no special favors for banks, no special favors for crypto, no bailouts, and no central planners deciding who gets the better lane.

The Bottom Line

Stablecoins can modernize payments. Banks should be freed to compete. Consumers deserve more options.

But Congress should not confuse a stablecoin yield loophole with financial freedom. If a stablecoin pays people to hold balances, it begins to act like a deposit substitute. If lawmakers allow that while keeping banks overregulated, they are not unleashing competition. They are engineering an advantage.

The better path is simple: close the loophole, deregulate banks, allow competing currencies, protect property rights, and let markets work.

CLARITY should bring legal certainty. It should not create Washington’s favorite lane.

Three Takeaways for Policymakers

1. Stablecoins should compete in payments, not through disguised deposit yield.
   
   Let them win on speed, cost, reliability, and access.
   
   
2. Banks are overregulated and should be freed to compete.
   
   Do not solve one distortion by creating another.
   ​
   
3. Real financial freedom means no special lanes.
   
   No favoritism for banks. No favoritism for crypto. No bailouts. No central-bank micromanagement.

Originally published at Inside Source's DC Journal. 

Washington has a long tradition of declaring victory before the battle is actually won. The Tillis-Alsobrooks stablecoin-yield compromise, now embedded in Section 404 of the Digital Asset Market Clarity Act, fits that tradition perfectly.

After months of debate, Sens. Thom Tillis and Angela Alsobrooks advanced compromise language meant to limit interest-like payments on stablecoin balances. The Senate Banking Committee is now scheduled to mark up the Clarity Act on Thursday, and supporters are presenting the compromise as the breakthrough that protects community banks while allowing crypto innovation to proceed.

That sounds nice. It is not enough.

The bill’s section-by-section summary says Section 404 prohibits covered digital asset service providers and affiliates from paying passive, deposit-like interest or yield on payment stablecoin balances, while allowing bona fide activity or transaction-based rewards under joint rules from the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and Treasury. The bill would ban rewards on idle stablecoin balances that resemble deposits while allowing transaction-based rewards.

That is the right distinction in theory. A rebate for using a payment product is different from interest paid for parking money. But legislation is not judged by theory. It is judged by incentives and loopholes.

The current language still appears to leave too much room for platforms to route around the prohibition. The banking trades’ May 8 letter makes the problem plain: payments tied to balances, tenure, monthly activity, or account-like structures could be packaged as “rewards” while functioning like yield. One example is a reward based on a stablecoin balance but triggered by a certain number of monthly transactions. Another is a flat monthly payment that rises as balances rise. If that survives, Congress will not have banned yield. It will have banned only the least creative version.

I believe that yield changes what a stablecoin is. A stablecoin positioned as a payment instrument is one thing. A stablecoin that pays people to hold it, whether directly from the issuer or indirectly through an affiliated exchange, membership program, or platform reward system, is something else. The corporate architecture may differ from a bank account. The economic reality may not.

That is the core problem. If a product functions like a deposit, competes like a deposit, and pays like a deposit, Congress should not pretend it is merely a payment tool because it sits on a blockchain.

The phrase “economically or functionally equivalent” sounds strong, but it is not self-executing. The bill would hand the hard work to regulators, requiring joint rules from the SEC, CFTC, and Treasury. That means Congress would punt the central policy question to agencies that have moved slowly and inconsistently on digital assets for years. That is not clarity. That is a placeholder with a good headline.

The stakes for Main Street are not small. Community banks are relationship lenders. They serve small businesses, farms, homebuilders, families, and local borrowers who often do not fit a Wall Street lending model. The joint banking letter warns that payment stablecoin yield or incentives acting like yield can reduce deposits and therefore reduce banks’ capacity to extend credit. It also warns that deposit flight from widespread yield-bearing stablecoin adoption could reduce consumer, small-business, and agricultural lending by one-fifth or more.

Maybe the worst-case estimates are too high. But the direction is obvious. If local deposits migrate into yield-bearing stablecoin platforms, reserves may still sit somewhere in the financial system. That does not mean the same farmer, contractor, family, or small manufacturer gets the same loan in the same community.

This is not anti-crypto. It is anti-favoritism.

There are only two principled answers. The first is to close the loophole for real. If payment stablecoins are supposed to remain in the payments lane, then interest-like rewards should be prohibited whether paid by issuers, exchanges, affiliates, brokers, or any intermediary in the chain. Remove easy structuring opportunities. Cover substance, not labels.

The second, and better, answer is to deregulate banks so they can compete. We have too many banking regulations already. Freer competition on price, technology, service, and returns would deliver better products without Washington choosing sides. The answer to regulatory overreach is not to give new entrants a special pass. It is to remove unnecessary burdens from existing institutions and let the market work.

Congress should not pass a bill that blesses yield workarounds, hands the hard questions to regulators, and calls it community-bank protection. That is government picking winners by fiat.

The Senate Banking Committee should tighten Section 404 before advancing the bill. If the current language moves forward, the crypto industry may call it a win. Community banks and Main Street borrowers may be left holding the bill.

Originally published at Washington Examiner.

Washington is floating a plan that would force banks to collect and verify customers’ citizenship information, with Treasury Secretary Scott Bessent saying the order is “in process.”

The intention may sound good to some: Deal with illegal immigration and tighten enforcement. But good intentions don’t excuse bad policy design. This plan would make law-abiding Americans pay higher costs and surrender more sensitive data because the federal government won’t fix immigration enforcement where it belongs.

​Here’s the first principle: If immigration policy is failing, fix immigration policy. Don’t outsource the mess to private institutions and pretend the cost disappears because it shows up as “compliance” instead of a line item in the federal budget. 

​Families still pay. They just pay through higher bank fees, worse service, and more red tape when they’re trying to do normal life: Deposit a paycheck, pay bills, or open an account for a kid headed to college.

Banks already operate under strict federal identity verification mandates. The Customer Identification Program rule in 31 CFR 1020.220 requires banks to collect identifying information and use risk-based procedures to form a “reasonable belief” they know a customer’s true identity. That’s not some casual guideline — it’s enforceable law. This proposal is a separate and far broader mandate: citizenship classification at scale.

The feasibility problems alone should stop this idea. What documents count as proof of citizenship? A passport? A birth certificate? A naturalization certificate? What about name changes, mismatched records, replacement documents, or older documents that don’t match modern databases?

Policymakers pushing this plan rarely grapple with the operational truth: When standards are unclear, and penalties are high, banks respond by slowing onboarding, demanding more paperwork, and denying or closing accounts to reduce compliance exposure. That’s not because banks are mean — it’s because the incentives punish mistakes more than they reward customer service.

Then there’s the cost, and it’s not hypothetical. One estimate finds that verifying citizenship for new accounts could add 33.1 million to 73.3 million additional paperwork hours and $2.6 billion to $5.6 billion in administrative costs. Treat those numbers like a floor, not a ceiling, because they focus on new accounts.

If the mandate extends to existing customers, you’re no longer talking about onboarding. You’re talking about re-papering a big portion of the entire banking system.

Compliance costs do not stay at the bank. They get passed along. Higher monthly account fees. Fewer low-cost checking options. More minimum balance requirements. Fewer branches in low-margin areas.

Less flexibility for small businesses trying to set up accounts quickly so they can make payroll. Community banks and credit unions get hit hardest because they cannot spread fixed compliance costs across a massive national footprint. The result is a hidden tax on everyday Americans — paid not to improve banking, but to cover for federal dysfunction.

This plan would also intensify the debanking problem policymakers say they want to reduce. Even before any citizenship mandate, regulators and lawmakers have been grappling with how compliance pressure and subjective standards can lead to restricted access and account closures. 

That’s why federal regulators have moved to curb the use of reputation risk as an examination tool that can nudge banks toward denying services for non-financial reasons. Add a sweeping citizenship verification regime, and you increase uncertainty and raise the stakes for errors. The rational response is de-risking: fewer accounts, more freezes, more closures, and more blunt screening rules.

Now add the privacy bomb. Citizenship verification means collecting, storing, and potentially transmitting highly sensitive personal information on a massive scale. Bigger datasets become bigger targets. More collection points and more transfers mean greater breach risk, more insider misuse risk, and more mission creep risk.

Once a federal pipeline exists, it rarely stays limited to its original justification. That’s the historical pattern of compliance architectures: “just this one thing” becomes the foundation for the next “just this one thing.”

Conservatives have pushed back for years against compelled financial disclosure and creeping surveillance. The fight over beneficial ownership reporting is a recent example of how quickly “law enforcement” logic can morph into a broad data-collection regime that sweeps up normal Americans who are doing nothing wrong.

A citizenship mandate in banking would be bigger than that, touching vastly more people and vastly more accounts.

The burden also won’t fall evenly. Passport possession is nowhere near universal. Estimates suggest roughly 47% of Americans don’t have a valid passport, meaning millions could face immediate documentation friction if passports become the default proof document. Seniors, rural residents, and lower-income households are most likely to get caught in the gears, especially where documentation offices are far away and support services are limited.

That’s not targeted enforcement. That’s collateral damage baked into the design.

Supporters will argue this is about fighting financial crime. But serious financial crime detection is primarily about transaction behavior, suspicious patterns, and network analysis — things banks already monitor under existing compliance regimes.

Citizenship status is a crude proxy that risks both false positives (hassling the innocent) and false negatives (missing sophisticated criminals). Worse, if you make mainstream banking harder, you push more people into cash-based or informal channels where transparency is lower and monitoring is weaker. That makes it harder, not easier, to detect real wrongdoing.

There’s a better way that doesn’t punish the compliant: Enforce immigration laws directly through the agencies responsible.

Improve verification where it belongs: in employment eligibility, visa tracking, overstays, and targeted investigations of real criminal networks. Don’t impose a sweeping new mandate that effectively turns banks into immigration screeners and forces families to pay higher banking costs to cover for Washington’s failures.

A free society doesn’t treat ordinary citizens like compliance suspects because the government won’t fix its own broken systems. Turning banks into border agents is the wrong tool, the wrong target, and the wrong tradeoff. 
​
If policymakers want a more lawful, more secure system, they should fix immigration policy without building a new financial surveillance layer that families end up funding.

Originally published at RealClear Markets. 

A Senate draft deal on stablecoin yield is taking shape at the exact moment the White House Council of Economic Advisers is telling lawmakers, in effect, “Relax, the numbers are small.” 

The CEA’s headline finding is that banning yield on payment stablecoins would raise bank lending by about $2.1 billion, with a claimed net welfare cost from the prohibition. That statistic is being pitched as reassurance. It shouldn’t be.

Some stablecoins can be a real improvement in payments. Faster settlement and lower friction are genuine benefits, and letting consumers earn a return on idle balances sounds like the kind of competition that forces everyone to do better. The mistake is pretending yield is just a consumer perk. Yield changes what the product is.

The policy question is not whether stablecoins are useful. It’s whether allowing “interest-like” rewards turns payment stablecoins into deposit substitutes, and what that does to the community-bank deposits that fund small businesses, farms, and local economies. That is why the ABA Banking Journal’s critique says the CEA “studied the wrong question.”

The CEA frames the debate backward. It models the effect of a prohibition on yield as if the prohibition is the correct baseline. But the contested scenario is the other direction: what happens when yield-bearing stablecoins scale up under a mature regulatory framework?

Today’s stablecoin market is roughly $300 billion in size under the CEA baseline. Yet the legislative goal of bills like GENIUS and CLARITY is to normalize stablecoins and expand adoption. Anchoring the analysis to today’s pre-expansion market is like estimating the impact of a new highway by counting traffic on a dirt road.

And credible projections don’t stop at $300 billion. Citi’s “Stablecoins 2030” base case points to around $1.9 trillion in issuance by 2030. Standard Chartered has projected the market could reach about $2 trillion by 2028. Even more cautious voices like J.P. Morgan research still see hundreds of billions ahead. The point isn’t which forecast “wins.” It’s that a model tuned to the smallest baseline will naturally produce the smallest impact.

The assumptions doing the heavy lifting deserve sunlight.

First, the CEA treats deposit flows into large banks and community banks as roughly equivalent even while acknowledging that this is unrealistic. Community banks are not scaled-down versions of the biggest lenders. They specialize in relationship lending where big banks often don’t compete aggressively. When a farmer or local manufacturer loses access to community-bank credit, “reserve recycling” into the financial system doesn’t necessarily make them whole.

Second, even when stablecoin reserves return to the banking system, they tend to reappear as wholesale balances and custody flows, not as sticky core deposits that actually power local lending. Treating wholesale balances as a clean substitute for relationship deposits understates the real credit impact on Main Street.

Third, the scale question matters far more than the CEA suggests. In its own stress-testing, moving stablecoins from around 1.7% to 10% of deposits materially increases the modeled effect on community banks, a reminder that the “negligible” conclusion is largely a function of baseline choice.

Meanwhile, community banks are not guessing about the risk. The ICBA’s analysis estimates that allowing yield on payment stablecoin holdings could reduce community bank deposits by roughly $1.3 trillion and cut community bank lending capacity by about $850 billion. That estimate rests on the reality that community banks hold about $4.8 trillion in deposits supporting roughly $4 trillion in lending.

So why are studies all over the map? Because the disagreement is mostly about assumptions: adoption speed, substitution between deposits and stablecoins, and where reserves sit. Forbes lays out how “bank” and “crypto” research often starts from different worlds and ends with different answers. That’s exactly why Congress should be cautious about treating one tidy number as a green light.

The principled concern here isn’t anti-innovation. It’s anti-two-tier regulation.

If stablecoins want to compete for deposits by paying yield, the honest answer is either to apply equivalent obligations for equivalent functions, or to deregulate banks so they can compete on equal footing. My preference is the second: we have too many banking regulations already, and freer competition would deliver better rates and better payments without Washington choosing winners.
​
But what Congress should not do in a Senate “deal” is bless a yield workaround that lets crypto platforms mimic deposit accounts when profitable while sidestepping bank obligations when inconvenient. That’s not a free market. That’s the government picking winners—by fiat.

Affordability is under pressure across the U.S.—and the root causes are increasingly tied to policy choices.

In this episode of This Week’s Economy, we examine how persistent inflation, excessive federal spending, weak state tax reform, regulatory burdens, and supply constraints are driving higher costs and limiting opportunity for families and businesses.

The stakes are clear: when government expands and markets are distorted, the result is higher prices, reduced investment, and slower economic growth.

This episode provides a full economic health check—from CPI and jobs data to federal budgeting, property taxes, banking regulation, lawsuit costs, and emerging risks to future growth like data center restrictions.

The payoff is a roadmap for improving affordability: restore fiscal discipline, remove barriers to supply, and allow markets to allocate resources more efficiently.

🎧 Watch the full episode at the link above. 
📖 Read the full show notes: https://vanceginn.substack.com/p/ca1a37b7-7c59-4410-ba95-faa5c8dc2eb0

Subscribe, share, and explore more at vanceginn.com to stay informed and engaged.

Originally published at RealClear Markets. 

​The latest panic over private credit says more about Washington than it does about finance.

A few major funds have limited withdrawals. Some software-heavy loans are under pressure. Critics are reviving the old script about “shadow banking” and fresh bailout chatter, while others warn that private assets are creeping into retirement accounts with risks many investors may not fully understand. 

Those concerns are worth taking seriously. But they still skip the real problem: government helped create this structure in the first place, and more government control would likely make it worse.

Private credit did not come out of nowhere. It grew because traditional banks pulled back from large parts of the lending market after 2008, especially for middle-market firms that still needed capital but no longer fit neatly inside the post-crisis banking model. 

The Federal Reserve estimates that U.S. private credit totaled about $1.34 trillion by mid-2024 and had grown roughly fivefold since 2009. That is not evidence of market failure. It is evidence that markets adapt when real demand exists and older institutions cannot or will not meet it.

A big reason banks pulled back was the government response to the last crisis. Dodd-Frank was sold as a cure for instability. In reality, it also increased compliance costs, hardened barriers to entry, and reinforced the advantage of the biggest incumbents. 

Add years of Federal Reserve intervention and distorted price signals, and it is no surprise that capital looked for other channels. That is what markets do when the government makes banking less competitive and more political.

Recent reporting has highlighted withdrawal caps at private equity funds run by Apollo, Ares, KKR, and Blue Owl. There are also rising warnings about software exposure, softer valuations, and higher defaults. 

Watch it closely. But watching closely is not the same thing as pretending this is another 2008.

That comparison is lazy. The 2008 crisis ran through deposit-funded banks, extreme leverage, maturity mismatch, and securities that transmitted panic across the broader system. 

The Office of Financial Research has said vulnerabilities tied to private credit appear low because private lenders are not highly leveraged and much of their financing is locked in for long periods. 

The Federal Reserve has likewise noted that immediate financial-stability risks appear limited.  Chairman Jerome Powell has indicated that the Fed is monitoring the sector but does not currently see a systemic threat. Even Jamie Dimon, one of the most vocal critics of private credit, has acknowledged that it “probably does not present a systemic risk.”

That does not mean there is no bubble. There may be. Some managers may have stretched for yield, mispriced liquidity, or crowded into weak credits. But that is exactly the kind of question markets should answer. 

If semiliquid funds overpromised liquidity, let investors punish them. If managers made bad bets, let losses expose them. If valuations were too generous, let markdowns do their job. 

A market does not prove its worth by never making mistakes. It proves its worth by revealing mistakes, pricing them honestly, and reallocating capital toward better uses.

That is why the wrong lesson from this episode would be more bailouts, more Federal Reserve backstopping, or another layer of Dodd-Frank-style micromanagement. 

The government has a rotten record here. It misses bubbles while they inflate, mislabels corrections as catastrophes, and then responds in ways that protect incumbents, distort prices further, and socialize losses.

Business owners and entrepreneurs are better served by more competition in finance, not less. They need a system where banks and nonbanks compete openly and fairly to meet real credit needs without Washington constantly tilting the field. Private credit may disperse risk more broadly than the concentrated banking model policymakers keep trying to preserve.
​
Private credit deserves scrutiny, not caricature. If funds make bad decisions, let the market discipline them. If they make good decisions, let them grow. That process can be messy. It is still far healthier than a system where the government rigs incentives on the way up and then grabs more power on the way down.