David Siegel sent me to a new Scott Adams post about Trump’s accomplishments so far:

[Update:  A commenter pointed out that I wrongly suggested that Adam’s claimed these were Trump “accomplishments”.  Actually he viewed them as “positive” events.]

Things That Are Positive

The economy

Trade deals

China relations

Russia (our frenemy) is working with the U.S. on Syria, North Korea

China is putting pressure on North Korea

Jobs

Healthcare progress (more to do)

Supreme Court nominee confirmed

Tax reform maybe

Optimism for an Israeli-Palestinian “deal”

Safe Zones coming along for Syrian refugees

Illegal immigration down over 70% because of Trump’s persuasion alone.

Business confidence high.

This is just bizarre.  Trump told us the economy under Obama was horrible.  Under Trump it’s almost exactly the same.  Job growth almost identical, GDP growth slower. Trump has accomplished almost nothing.  And now it’s good?

He has accomplished nothing significant on trade.  The only “plus” is that he has not implemented his worst ideas.  But abandoning TPP was a big minus.  What success is Adams referring to?  Surely not the deal where the Chinese tricked us?

China relations are no different.

The Trump Administration claims that Russian relations are at a new low.  What is Adams talking about?

China’s policy toward North Korea is the same as under Obama.

Job growth is the same.

I don’t see much sign of healthcare progress.

Yes, a Supreme Court Justice was confirmed–that’s a win.

Trump still lacks a serious tax reform plan.  So what is Adam’s giving him credit for?  Intentions?

“Optimism for an Israeli-Palestinian “deal””    Do I even have to comment on this?

Basically it’s all smoke and mirrors.  I understand that Adams has a lot riding on the success of Trump, but this list is just . . .

Sad!

PS.  I guess I’m not the only one who dislikes Trump.

PPS.  And don’t worry about these headlines, Scott Adams says things are going well:

Donald Trump’s leaking of classified intelligence to Russians ‘far worse than reported’

Donald Trump’s aides heard ‘yelling’ in White House office as presidency descends into chaos

GOP Senator: White House In A ‘Downward Spiral’

Update:  Recall this:

“The real story that Congress, the FBI and all others should be looking into is the leaking of Classified information. Must find leaker now!” the president said on social media in response to continuing coverage of the ongoing probe into potential collusion between the Trump campaign and Russia.

As soon as Trump finds the leaker, I suggest he join OJ Simpson in searching out the real killer of OJ’s wife.

One thing that bugs me about the media is that they are way too soft on Trump. Yes, they point out some of his lies and also his corruption, but for some reason they are reluctant to come right out and say what many Americans know to be true—the man is a complete idiot.

Indeed a recent poll that asked people to characterize Trump in one word, the term ‘idiot’ came first, with 39%.

The Economist recently interviewed Trump and asked him about his proposal to abolish the estate tax.  Here’s how Trump responded:

I get more deductions, I mean I can tell you this, I get more deductions, they have deductions for birds flying across America, they have deductions for everything. There are more deductions … now you’re going to get an interest deduction, and a charitable deduction. But we’re not going to have all this nonsense that they have right now that complicates things and makes it … you know when we put out that one page, I said, we should really put out a, you know, a big thing, and then I looked at the one page, honestly it’s pretty well covered. Hard to believe.

Yes, hard to believe.  There are three things that one can say about that answer.

1.  Parts of it are utter gobbletygoop, which make no sense.

2.  The random comments are not accurate–he’s not proposing the elimination of the interest or charity deductions.

2.  It’s not even a response to the question; the rambling comments have nothing to do with the estate tax.

Given his appalling views on so many issues, I’m kind of glad that he’s incompetent.  Maybe that’s why the stock market was not impacted by the recent Comey fiasco.  Here’s what I said 5 weeks ago:

Trump is like one of those kings/sultans/emperors in the history books who assumed power as a child and had various ministers conduct governance while they spent time in their harem or engaged in falconry.

And here’s Matt Yglesias:

So the president of Mexico and the prime minister of Canada call Trump up, one immediately after the other, raising identical points. They get him to agree to a renegotiation rather than a withdrawal. And then it turns out that lots of technical legal details mean that the actual renegotiating has to be delayed for a while.

Trump, somehow, does not see that the upshot of this story is that he has been manipulated. Indeed, according to reports in the Canadian press, the reason the manipulation was so effective was that members of the White House staff reached out to Trudeau to tell his team how to talk Trump out of withdrawing from NAFTA.

It’s hard to know what to say about this beyond the obvious: Regardless of the topic, the president has basically no idea what’s going on. And his staff has given up on trying to bring him up to speed. Instead, they take advantage of his ignorance to try to sell him on selective misinformation — or flattery from foreign leaders — to park policy outcomes where they would like to see them.

I love it.  Maybe Trump is not President.  Perhaps we should be referring to “President Goldman Sachs”.

Yglesias points out that in the Economist interview Trump spews out one “fact” after another that is a complete lie.  It’s all just made up.

PS.  Here’s the poll that named Trump an idiot.  Why is “buffoon” down at 7%? That term seems perfect.

I always knew that Trump was kinda dumb, but I had no idea he was this bad.  I actually found the interview kind of funny:

Will you keep interest deduction in the corporate tax? Will corporate interest payments…
Do you want to answer?

Mr Mnuchin: We’re contemplating it. We’re contemplating it.

Contemplating getting rid of it?
Mr Mnuchin: No, we’re contemplating keeping it. That’s our preference. But we’ll look at everything.

So what would your preference be Mr President? You know about that very well.
No, I would say probably…I think we’re contemplating is the word. And it hasn’t been determined yet, but we’re contemplating.

Contemplating…
We’re contemplating various…I have to say, we’re contemplating various things, but one of the things that’s very important is simplicity. We want to keep it as simple as possible. Because even if you do, it’s complicated. I mean even if you keep it simple with taxes it gets complicated.

That’s bad, because eliminating the deductibility of interest would have put debt and equity on a level playing field (dividends are not deductible) and allowed for much lower tax rates.  The Trump administration appears more concerned with pleasing Wall Street than making taxes more efficient.

But beyond that it’s OK if the tax plan increases the deficit?
It is OK, because it won’t increase it for long. You may have two years where you’ll…you understand the expression “prime the pump”?

Yes.
We have to prime the pump.

It’s very Keynesian.
We’re the highest-taxed nation in the world. Have you heard that expression before, for this particular type of an event?

Priming the pump?
Yeah, have you heard it?

Yes.
Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. It’s what you have to do.

It’s…
Yeah, what you have to do is you have to put something in before you can get something out.

Mr Mnuchin: And as we talked about, economic growth under the Trump administration could increase revenues as much as $2trn over the ten-year period of time. So priming the pump in the short term leads to growth.

So you would have a bigger deficit, a stimulus, to prime the pump that would lead to faster growth?
So I happen to think that 3% is low. But you can’t do it if your companies are leaving the country because taxes are too high.

Newton and Leibniz discovered calculus.  Keynes and Trump discovered prime the pump.

1.  Sessions (who lied about his Russia connections) announces that the War on Drug Using Americans will be scaled up, with even longer prison sentences (for activities that are perfectly legal in many states.) Meanwhile clueless conservatives/libertarians cover their eyes about the immense human suffering of “those people” and prattle on about how Gorsuch is a better choice than Garland.

2.  Trump acts like a Mafia Don, threatening the former head of the FBI.

3.  Sean Spicer refuses to confirm or deny that Trump is taping phone calls, a rumor created by Trump himself.

4.  Spicer falsely claims that Trump never asked Comey for a loyalty oath.

5.  Spicer falsely claims that Clapper once exonerated the Trump campaign from having colluded with the Russians.  (He didn’t)

As an American I am appalled.  As a blogger I’m on cloud nine, looking forward to many more months and years of being able to rub all this in the face of Trumpistas.  🙂

PS.  Meanwhile, GOP Senators and Representatives run and hide from the press.

A commenter named “tpeach” recently asked the following:

My question is, what would have happened if the Fed hadn’t cut rates between Dec 07 and Apr 08? What would have happened to the base and velocity if the fed kept the rate stable while the Wicksellian or market rate plummetted during that time? Would the base shrink? If so, what are the mechanics behind that process? Also, how can the fed adjust the rate without changing the base? And why didn’t velocity drop when they cut rates during this time?

I wasn’t able to provide much of an answer.  Here I’d like to explain why.

At first glance, the obvious counterfactual would seem to be a smaller monetary base and a higher path of interest rates.  But that is a very fragile equilibrium, which could easily spiral off in one direction or another.  For instance, suppose the Fed had reduced the monetary base in late 2007 in order to prevent any fall in the fed funds rate.  What might have happened next?  One possibility is that the economy would have gone into a deep depression in early 2008.  Most likely, the Fed would have responded to that deep depression with a big rate cut and a big increase in the monetary base.  Thus in this case the counterfactual path of the base would have been a bit lower in late 2007, and much higher in early 2008. Indeed what I just described is roughly what did happen between early and late 2008—I am simply contemplating that scenario playing out 6 months earlier.

Monetary equilibrium often has “knife edge” qualities.  Imagine climbing along a mountain ridge with steep drop-offs on both sides.  If you are not at the peak of the ridge, you have the option of walking a bit further up the slope.  But if you go too far, you risk plunging down the other side.  Monetary economics is kind of like that.  Small changes are often “Keynesian” in character, meaning slightly tighter money means slightly higher nominal interest rates.  But larger changes can easily be “Neo-Fisherian” in character, meaning tighter money leads to lower nominal interest rates.  And it’s not just a question of more or less tight money, it’s more about expectations regarding the future path of policy.

Yip Cloud recently pointed me to the latest in his excellent series of interviews of macroeconomists, this one of Atif Mian:

Some people have the 5-year adjustable rate mortgages (ARMs), others have the 7-year ARMs. Let’s say that the mortgages started in 2005. When 2010 comes, in the middle of the slowdown, those with the 5-year ARMs would get the interest rate reduction because the mortgages reset to a lower rate automatically. They get this reduction in the interest rate that the Fed was trying to pass through to the individual households. But those individuals who have a 7-year ARMs still have to wait for 2 additional years before they get a lower interest rate.

By taking advantage of this kind of variation in the cross-section, they can actually show the impact of the reduction in interest rate for the 5-year ARMs owners, by comparing them to the 7-years ARMs owners who didn’t receive the same reduction in interest rate just because they have a different kind of financial contract. What they’ve shown with this kind of analysis is that a reduction interest rate is actually beneficial. It actually allows the lenders to boost their spending and improves local economic outcome, in term of employment and aggregate demand. That’s just one example that actually shows monetary policy can be effective.

At the same time, that same work also shows why the monetary policy was ineffective. If you think about it, you need to be able to pass through the action of the Fed to the ultimate households. However, if people are struck in the 30-year fixed rate mortgages, they would not be able to take advantage of this lower interest rate environment. As a result, monetary policy is not able to pass through to the ultimate households. It is going to be constrained in the effectiveness. That’s a very important insight that has come about because of this kind of work that I emphasized. That’s a very interesting and useful development.

If people have borrowing capacity and willing to borrow, the same monetary policy shock can have more impact on the real economy. When you lower interest rate, for people who are prone to borrow more, they can borrow aggressively against a lower interest rate and that boosts the economy.

But if the same individuals have already borrowed a lot in the down-cycle, you can lower the interest rate but those individuals are underwater. They can’t borrow any more. Then the same reduction in interest rate is not going to have much of an impact on the macroeconomy. This kind of logic also suggests that monetary policy itself is going to be insufficient in dealing with the downturn. You need to focus on something that Sufi and I have to try to emphasize in our book.

I can’t emphasize enough that (as Friedman, Bernanke and Mishkin pointed out) changes in interest rates are not the same as changes in the stance of monetary policy, for standard “never reason from a price change” reasons.  Thus it’s not possible to draw any conclusions about the effectiveness of monetary policy by looking at the impact of changes in interest rates.  To take the most obvious reductio ad absurdum example, a Mexican currency reform exchanging 100 old pesos for one new peso will immediately reduce the price level by 99%, without any significant change in interest rates.