Does Trump favor tighter money or easier money? Neither, he favors teasier money. He likes to tease us with ambiguity.
Here’s what we know so far. He’s a “debt guy” who likes low interest rates. And he’s complaining that the Fed’s low interest rate policy is hurting the economy, or helping Obama, or something.
Ramesh Ponnuru emailed me the following comment after the first debate:
if you didn’t watch it, you missed the part where Trump said our currency is overvalued and then called for an interest-rate hike.
Judy Shelton (a hard money advocate) has been advising Trump on money, and has a piece in the Financial Times explaining his views:
Donald Trump has broken a cardinal rule in US presidential campaigning by openly questioning the effectiveness of the Federal Reserve. He believes that the low interest rate regime engineered by America’s central bank has not stimulated real growth but has rather created a “false economy” that could lead to the next global financial meltdown. Moreover, he questions the motives of Fed officials. “The Fed is being more political than Secretary Clinton,” he said in Monday night’s presidential debate.
OK, so he doesn’t like Fed policy—so what are Trump’s views on money? Shelton clarifies things at the end of her piece:
By focusing on the Fed, Mr Trump raises the importance of restoring monetary integrity. The dollar should be the world’s most trustworthy currency.
Can the pursuit of sound money at home be reconciled with the notion of American economic leadership on the world stage? Mike Pence, Mr Trump’s running mate, has called for a rethinking of the international currency system — even proposing that perhaps the time has come to have a debate over gold and the proper role it should play in monetary affairs.
Mr Trump has not publicly embraced any such idea, although he has mused: “Bringing back the gold standard would be very hard to do, but boy, would it be wonderful.” No one anticipates that a Bretton Woods-style conference will soon take place at Mar-a-Lago, the exclusive Trump resort in Florida. Still, as Mr Trump often urges: it is time to start thinking big once again.
The writer is a member of the Trump economic advisory council
So what are Trump’s views? Very simple. For elderly savers, Trump favors higher interest rates. For big developers, he favors low rates. For consumers, he wants a strong dollar. For exporters, he wants a weaker dollar. Each group will get what they want, but not all in the same universe. You see, Trump’s monetary views are best described as a wave function, which will collapse to a single outcome on January 20th. Trump is the first post-modern candidate, the first to understand that truth is what the voters let you get aways with, and that the multiverse offers the possibility of achieving seemingly irreconcilable aims.
The same is true in the realm of tax policy. Trump’s new tax proposal, recently unveiled, eliminates the earlier proposal for a sharp cut in business taxes on passthrough entities. But the new proposal also maintains the earlier proposal for a sharp cut in business taxes on passthrough entities (which cuts the top rate for family businesses from 40% to 15%). Isn’t that impossible? Not at all. The elimination of the tax cut only applies to the deficit hawks at the Tax Foundation, who estimate the cost to the federal budget. The proposed giveaway to big developers still applies to business associations. Here is the NYT:
The campaign then told the Tax Foundation, a conservative-leaning Washington think tank it asked to price the plan, that Mr. Trump had indeed decided to eliminate the tax cut.
Call it the trillion-dollar lie: Both assertions cannot be true.
At issue is whether Mr. Trump’s plan would tax small businesses, partnerships and other “passthrough” entities at the same 15 percent rate as large corporations, as he proposed last year, or whether they would continue to pay individual income taxes, at rates as high as 33 percent.
The campaign’s conflicting accounts of its own proposal are particularly remarkable because Mr. Trump and his advisers have taken months to refine the details, which Mr. Trump, the Republican presidential nominee, unveiled in an economic policy speech on Thursday in New York.
In this case, however, telling two versions of the same story benefited the Trump campaign.
Dropping the tax cut was central to Mr. Trump’s optimistic claim that his plan would not increase the federal debt. But by simultaneously promising to keep the tax cut, the campaign won the support of the National Federation of Independent Business, an influential small-business lobbying group.
“We’re comfortable” that Mr. Trump is committed to preserving the tax break, Jack Mozloom, a spokesman for the group, said Friday morning. “We have it directly from his campaign.”
The Tax Foundation was not so comfortable.
“There is a disconnect between the plan as understood by us and the plan as understood by the N.F.I.B.,” said Alan Cole, an economist at the foundation who worked on the cost estimate that Mr. Trump cited in his speech.
What does Binyamin Appelbaum mean by saying “both assertions cannot be true”? Has he never heard of quantum mechanics?
Given the closeness of the election, it seems almost certain that Trump will win in at least some universes in our multiverse, and Clinton will win in others. In fact, I think nature has “rigged” things that way. And in some of the Trump winning universes the 15% rate will be implemented, while in others it will not.
I used to think QM was too complicated for me to understand, but with Trump’s help I’m beginning to get the hang of it. Don’t worry, it’s all going to happen anyway . . . somewhere.
PS. You might wonder why other candidates haven’t adopted this strategy. It appears that most are deficient in a very important substance that scientists call “gall”. Just look at Jeb Bush, you can see in his pale skin a clear deficiency in gall. In contrast, Trump’s orange complexion is just bursting with gall. He must take gall enrichment vitamins every morning. Bush was only able to come up with a pathetic 2 “pants on fire” lies during the debates, while Trump destroyed the rest of the field with 48. Jeb tried putting an exclamation point after his name, but even that didn’t work.
PPS. Trump assured us that while he knows nothing about government policy, he would get the “best people” to advise him. I guess that means Peter Navarro on trade, Judy Shelton on money, and Larry Kudlow on tax policy.