People are being way too kind to Trump

I am starting to see a disturbing pattern, people trying to defend Trump’s late night call to General Flynn, asking him whether its better to have a strong currency or a weak currency. The argument people are making is that economists can’t agree on whether a strong currency is good or a weak currency is good, so why shouldn’t Trump’s question be viewed as reasonable?

Because Trump’s already made up his mind on the issue!  He campaigned on the claim that China was manipulating the yuan, and that this was hurting the US.  But how can he assert that a change in the yuan/$ exchange rate hurts the US, when he doesn’t even know whether the US benefits from or is hurt by a strong yuan?  Trump’s just admitted that his campaign promises on exchange rates were meaningless, he was just blathering on about something his protectionist buddies fed him.  Trump himself doesn’t even understand this stuff, that’s why he latched onto Peter Navarro.  Navarro uses all this hyperbolic rhetoric about the Chinese destroying America, and Trump laps it up because his instincts tell him the same thing.  But if asked to explain how, he wouldn’t be able to tell you whether it was the weak yuan or the strong yuan that hurt us, just that he “knows” those “crafty Asians” must be stealing us blind.  (OK, made up quotes, but that’s how his mind seems to work.)

I hear you say, “Yes, but Trump has advisors who do have a sophisticated understanding of international economics”.

Oh really?  Peter Navarro?  Wilbur Ross?  Here is one of Trump’s top economic advisors, Gary Cohn:

At the start of 2015 there were three countries in the world that were willing to have a strong currency. The Swiss, the Chinese, and the U.S. The Swiss pulled the rip cord overnight. They just ripped it off and said, ‘We are done. We are done having a strong currency. It is too expensive to defend this.’

ROTFL

The Swiss move was a headline story.  If Cohn doesn’t even know whether the SF went up or down, then he has no idea of what’s happening.  He should not even be discussing exchange rates with the WSJ.

I’m telling you, we are being governed by people who know nothing.  Who exactly is going to do these negotiations?  I can just see them returning from Beijing with a Chinese promise to “raise” the value of the yuan from 7 to the dollar to 8 to the dollar.

PS.  And BTW, Trump did not “keep his promise” to protect America from Muslims.  His proposal is now dead.  He failed to keep his promise, and he’ll keep failing.  Think about it.  A GOP that expected to succeed would be flying out of the gate, with a first 100 days of incredible energy and achievement.  Instead we hear more and more talk that “Obamacare repeal will have to wait for 2018” or “tax reform will have to wait for 2018”. That’s a party that has no guts. Sad!

The GOP reminds me of this Monty Python routine.

PPS.  Nixon didn’t reach this stage until the summer of 1974:

The New York Times, meanwhile, painted a portrait of a brooding commander in chief, wandering the White House alone in a bathrobe at night, watching too much cable television and venting his frustrations through angry tweets.

“I think it’s a cry for help,” said Elizabeth Rosenberg, a counterterrorism expert at the Treasury Department under Obama. She said many staffers still working in the national security agencies under Trump see what’s happening and are driven by a simple motive: “Incredulity, and the need to share it.”

Thank God that Trump doesn’t drink; Nixon was getting drunk a lot towards the end.


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45 Responses to “People are being way too kind to Trump”

  1. Gravatar of E. Harding E. Harding
    9. February 2017 at 19:55

    Sadly, Scott, for once (in a long time) you are right on all counts. Screw the courts and Trump’s advisors’ manifest ignorance.

  2. Gravatar of msgkings msgkings
    9. February 2017 at 19:59

    If he’s already really doing that at night there’s a big chance he doesn’t last 4 years. And there’s no chance he runs again. Zero.

    Why would he if he’s not enjoying it? His wife and kid and money are in NY, he will have to run against someone not named Clinton, he will be 74 years old, and he risks losing. Don’t run and you go out a winner.

  3. Gravatar of Matthew Moore Matthew Moore
    9. February 2017 at 20:16

    I despise Trump. But an interesting question occurs reading this.

    I often say that truly selfless people should not work for charities. They should work for banks and live like monks, and donate the difference.

    Given that people won’t vote for optimal policies, would a selfless altruist be justified in delivering a bunch of populist lies in order to win power and (say) end the war on drugs, reform the tax system and the FDA and make social security sustainable?

  4. Gravatar of msgkings msgkings
    9. February 2017 at 20:24

    @Matthew: In other words just run for one term? Some presidents declared it and kept the promise, like Polk. Also, Congress is really in charge of doing all the things you suggest. Let’s say Trump wanted to do all three, it’s really up to Paul Ryan.

    That;s why although I despise Trump like you, I’m not too worried he can wreck the country.

  5. Gravatar of mbka mbka
    9. February 2017 at 21:17

    In this context, I am surprised how much Trump has aged in physical appearance in such a short time. All US presidents age fast, visually speaking – just compare Obama with what he was 8 years earlier. But with Trump it only took weeks, including apparent weight loss, given his face. Reality bites.

  6. Gravatar of morgan warstler morgan warstler
    9. February 2017 at 21:22

    didn’t happen

  7. Gravatar of Major-Freedom Major-Freedom
    9. February 2017 at 21:58

    I am starting to see a highly disturbing pattern in Sumner’s posts: Envy of Trump.

    There are better people to be envious of in the world.

  8. Gravatar of Andy Andy
    9. February 2017 at 22:52

    The most disturbing thing in my mind is the total lack of check and balance from Congress. It’s been amazing to see Ryan and McConnell suddenly being all for fiscal spending or trade restrictions or “picking winners and losers”. As long as their funders get some tax cuts, Paul and Mitch are happy campers.

  9. Gravatar of mbka mbka
    9. February 2017 at 22:52

    MF,

    your reading comprehension?? Sad!!

  10. Gravatar of mbka mbka
    9. February 2017 at 23:44

    Andy,

    I suspect that the experienced politicians in congress have realized that they may not have to do anything to resist. They just have to wait for the train wreck to produce itself without losing energy in futile battles.

  11. Gravatar of ChargerCarl ChargerCarl
    10. February 2017 at 00:33

    An absolute must read from Scott Alexander:

    http://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/

  12. Gravatar of Jaap Jaap
    10. February 2017 at 01:17

    Most of these guys are chauffeurs. (Feynman)
    Too bad he got the keys to the biggest, baddest, fastest, most sensitive car out there, and he seems to like to drive it into the onlooking crowd.

  13. Gravatar of Fred Fred
    10. February 2017 at 02:02

    FWIW, Trump has an undergrad degree in economics from Penn.

  14. Gravatar of Major-Freedom Major-Freedom
    10. February 2017 at 04:15

    mbka:

    Your ability to read between the lines? Sad!

  15. Gravatar of Benjamin Cole Benjamin Cole
    10. February 2017 at 05:19

    Ronald Reagan sermonized about a strong dollar a lot.

    Then at the 1986 Plaza Accord there was agreement between the governments of France, West Germany, Japan, the United States, and the United Kingdom, to depreciate the U.S. dollar in relation to the Japanese yen and German Deutsche Mark by intervening in currency markets.

    But thing about Trump is, if you do not like his policy today wait for a few hours. It will change.

    He is like Reagan in fast motion.

    Side note: One thing Trump does not get credit for: He is the first GOP president in while not to cite God when discussing U.S. policies or himself.

    Trump public persona is godless. That is an improvement.

  16. Gravatar of Benjamin Cole Benjamin Cole
    10. February 2017 at 05:23

    PS 1985 Plaza Accord, not 1986. BTW, US dollar went down by 50% thereafter.

    Reaganauts played hardball, no?

    They threatened heavy trade restrictions unless the dollar depreciated.

    And they know how to do trade restrictions–Cato Institute said Reagan was the biggest Presidential protectionist since Hoover, and perhaps eclipsing him (the Smoot-Hawley tariffs were somewhat toothless, reports Doug Irwin).

    Trump looks like a cream puff next to the Reagan boys.

  17. Gravatar of Christian List Christian List
    10. February 2017 at 08:40

    Considering that (according to you) Trump is just a “small cloud attached to an awfully big silver lining” you do write incredibly often about him.

    Additional note: Funny to see how disillusioned E. Harding already is.

  18. Gravatar of Ray Lopez Ray Lopez
    10. February 2017 at 09:12

    Boring Sumner post, as he tries to divine the mind of Trump, what he was thinking, but this is interesting: (Sumner) “The Swiss move was a headline story.  If Cohn doesn’t even know whether the SF went up or down, then he has no idea of what’s happening.” – tell us professor, did the Swiss GDP going down for one quarter after the Swiss franc devaluation (Q1 only, as GDP ended the year largely flat) prove money is not neutral? It was a perfect laboratory experiment: Switzerland is a small country, largely dependent on banks, and the exchange rate arbitrarily changing impacted peoples desire to park money in CH banks. And yet…the effect was so small (Q1), and perhaps even there’s some other conflating variable at work? Blog on this please.

  19. Gravatar of Christian List Christian List
    10. February 2017 at 10:08


    Trump public persona is godless. That is an improvement.

    I’m not sure if this is a good thing. He might as well think that he is a god. A god who of course does not tolerate the idea that there might be a being that is superior.

  20. Gravatar of Tom Brown Tom Brown
    10. February 2017 at 10:12

    didn’t happen

    Shortest warstler comment ever.

  21. Gravatar of Philip Crawford Philip Crawford
    10. February 2017 at 10:33

    It’s been my experience that the less people know, the better they are at breaking things. And if the voters truly did elect him to break things (drain the swamp), then he seems almost overly qualified.

    I’m disappointed in Morgan’s comment. Low energy. Sad.

  22. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    10. February 2017 at 10:51

    ‘I’m telling you, we are being governed by people who know nothing.’

    In contrast to having been governed by people who thought they knew evertything. I say the jury is still out on what works better.

  23. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    10. February 2017 at 11:03

    David Henderson just said, on CNBC, that Trump’s cabinet picks are better than Reagan’s;

    http://video.cnbc.com/gallery/?video=3000592215

  24. Gravatar of Jim Glass Jim Glass
    10. February 2017 at 11:14

    Trump just lost one supporter. A good friend of mine (upper middle class, very well educated, an accomplished attorney, social-policy liberal, Republican, tough law-and-order due to his criminal law background, *extremely* anti-Hillary) who was a big Trump fan until yesterday is railing against him today. “He’s done!”.

    Trump’s offense, the first roundups of immigrants being deported…

    “He blew a golden opportunity. He should have had a list of ’10 worst immigrant felons’ prepared, murderers and rapists, and right away had them arrested by ICE agents in front of the TV cameras, ‘See how I’m protecting America against foreign criminals!’

    “Instead he’s deporting middle-age women making $9 an hour for the crime of using a false SS number ten years ago to get a job, who’ve worked steadily and reported in voluntarily in every year since then without a problem, along with persons adopted from abroad at age 3 by US parents who never bothered to get them their citizenship papers.

    “He’s either Plain Crazy or Totally Incompetent.”

    A big Trump fan all the way until yesterday. It’s interesting how particular issues touch home for different people.

  25. Gravatar of A Definite Beta Guy A Definite Beta Guy
    10. February 2017 at 13:16

    Really hate to tell you this, but the problem isn’t Trump. He’s clearly capable of learning and asking the “right” questions. He’s also adept enough to knock off 2 political dynasties in a year.

    Both Peter Thiel and Elon Musk seem to have some influence over the guy. So…he’s open to persuasion.

    Problem are know-it-alls who don’t know how to talk to normal people. Majority of Americans still think evolution is made up and being a Christian is at least somewhat important to being a real American. History is littered with cosmopolitan cities overrun by the country rabble. Y’all ain’t special just because it’s Current Year.

  26. Gravatar of msgkings msgkings
    10. February 2017 at 13:31

    @ADBG: so which are you? “Normal” people/country rabble or know-it-all?

  27. Gravatar of ssumner ssumner
    10. February 2017 at 14:14

    Matthew, You asked:

    “would a selfless altruist be justified in delivering a bunch of populist lies in order to win power and (say) end the war on drugs, reform the tax system and the FDA and make social security sustainable?”

    No. Trust the process.

    Ben, You said:

    “They threatened heavy trade restrictions unless the dollar depreciated.”

    You now believe in magic? They said “depreciate” and it depreciated????

    Ray, You said:

    “Swiss GDP going down for one quarter after the Swiss franc devaluation”

    Thanks for bringing a smile to my face. You are hereby qualified to be a Trump economic adviser!

    Patrick, I think David is wrong.

  28. Gravatar of Matthew Waters Matthew Waters
    10. February 2017 at 14:50

    “An absolute must read from Scott Alexander:

    http://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/

    This is interesting, but it seems pretty simple for the sectors he cites. They all have immense and very distortionary government regulation and subsidization.

    For education and health care, subsidization is structured in a way without limits. Ironically, single-payer health care and government universities in Europe limit costs more as government directly decides costs. In America, health insurance is an unbounded tax deduction, subsidizing 25-40% of the cost. Student loans are more indirect through no default risk and more lenient payment options.

    This doesn’t explain cost rises of what American government does pay for directly, such as K-12 and Second Ave Subway. I think America and its common law system has some serious institutional issues as well.

  29. Gravatar of A Definite Beta Guy A Definite Beta Guy
    10. February 2017 at 14:54

    @ADBG: so which are you? “Normal” people/country rabble or know-it-all?

    I am a smug know-it-all. I am, after all, commenting on the blog of a random econ professor most noted for an obsession with NGDPLT.

  30. Gravatar of B Cole B Cole
    10. February 2017 at 16:46

    Scott Sumner: As you well know, the major centrsls banks intervened in FX markets after the Plaza Accord.

    “After the Accord “exchange rate value of the dollar versus the yen declined by 51% from 1985 to 1987. Most of this devaluation was due to the $10 billion spent by the participating central banks. Currency speculation caused the dollar to continue its fall after the end of coordinated interventions. Unlike some similar financial crises, such as the Mexican and the Argentine financial crises of 1994 and 2001 respectively, this devaluation was planned, done in an orderly, pre-announced manner and did not lead to financial panic in the world markets. The Plaza Accord was successful in reducing the U.S. trade deficit with Western European nations but largely failed to fulfill its primary objective of alleviating the trade deficit with Japan.”

    I’ll say it again: compared to the Reaganauts and their trade protectionism and manipulation of currency markets to bring down the exchange value of the dollar, Trump is but a creampuff.

    Dudes, the comparison isn’t even close.

  31. Gravatar of Ray Lopez Ray Lopez
    10. February 2017 at 18:51

    @Sumner who says: “Ray, You said: “Swiss GDP going down for one quarter after the Swiss franc devaluation”
    Thanks for bringing a smile to my face. You are hereby qualified to be a Trump economic adviser!” – my gosh man, you’re so mad you try and be against me when I’m actually making YOUR point, and on YOUR side. Look here: http://www.tradingeconomics.com/switzerland/gdp-growth Notice that in Q1 of 2015, after the Swiss CB changed the Swiss franc on Jan. 15, 2015, so it was no longer pegged to the Euro, the GDP of CH went down for Q1 of 2015. Is this related to the CH central bank unpegging or not? That is my point, and I’m saying possibly it is, that money is NOT neutral in this particular small country special case. Got it now? Read slower. You’re a mile wide and an inch deep. (I had to insult you at least once this paragraph).

  32. Gravatar of Benjamin Cole Benjamin Cole
    10. February 2017 at 19:14

    REAGAN SUGGESTS TIGHTER CONTROL OF CENTRAL BANK

    By FRANCIS X. CLINES, Special to the New York Times
    Published: September 18, 1982

    WHITE HOUSE, Sept. 17— President Reagan today raised the question of whether the Federal Reserve Board should be placed under the authority of the Treasury Secretary.

    –30–

    Ha! Those were the days. Now, suppose Trump suggests placing the Fed under his authority?

    Satan! Satan ! Satan!

    But Reagan did exactly did.

  33. Gravatar of Benjamin Cole Benjamin Cole
    10. February 2017 at 19:52

    Re Plaza Accords, from the NBER.

    http://www.nber.org/chapters/c13542.pdf

    Following the Plaza meeting, the dollar fell sharply, even before any intervention had taken place. On Monday morning, 23 September 1985, the dollar had fallen 5 percent against the German mark and 2.6 percent against the Japanese yen since the previous Friday. The Bundesbank began interven- ing on Monday in the European markets, selling $8 million. Later in the day, when the New York market opened, the United States began buying German marks and Japanese yen. With Japanese markets closed on that Monday, the Bank of Japan did not begin intervening until Tuesday, 24 September 1985. Over these Wrst three days, the United States and the other G5 central banks collectively intervened in “massive” amounts (Bulletin, February 1986, 110).
    The dollar depreciated sharply against both the mark and the yen until 4 October 1985, as the United States sold $199 million against German marks and $262 million against Japanese yen. As the dollar began to Wrm somewhat after 4 October, the United States intensified its intervention efforts, selling nearly $1.6 billion against marks and nearly $618 million against Japanese yen during the middle two weeks of October. Central banks in other large developed countries continued to intervene (Bulletin, February 1986, 110–11). After this, intervention efforts rapidly tapered off and by 8 November the Plaza efforts ended. Overall, the United States sold nearly $1.9 billion against German marks and just over $1.4 billion against Japanese yen. The US Treasury’s and the Federal Reserve’s accounts shared equally in the operations. The interventions also were closely coordinated with the Bank of Japan and the European G5 countries (Bulletin, February 1986, 111). Germany sold $1.2 billion. All of the operations were highly visible to the market, suggesting that the operations sought to influence expectations.”

    —30—

    I would say “massive” intervention and expectations accounted for a 50% deprecation of the US dollar after the Plaza Accord.

    Trump’s trade and currency proposals are but a shadow of the Reagan record.

  34. Gravatar of Jeff Jeff
    10. February 2017 at 20:05

    @Jim Glass,

    Deporting someone takes a long time, much longer than Trump’s been in office. The deportations your friend is so upset about were most likely the work of the previous administration. And really, is he complaining because Trump wasn’t grandstanding enough?

    People are really getting silly about all this. Like Scott says, as soon as the subject turns to politics, we all seem to lose at least 15 IQ points. You (Jim Glass) may be the only exception to that rule I’ve seen in these comments.

    On the upside, however, the newfound brevity of Major Freedom is a real plus.

  35. Gravatar of mbka mbka
    10. February 2017 at 21:49

    Jim Glass,

    “Instead he’s deporting middle-age women making $9 …” etc.

    I am not sure what to say. What else did your friend expect? Deportation doesn’t discriminate in favor of nice people, and the mean ones either go under cover, or are rich enough to afford good lawyers. It always hits the ordinary person who’s basically scrambling to keep their lives together.

    I’m a perfectly well informed, reasonably middle class, and middle aged Westerner, living outside his (small) country of passport origin for nearly all his life, in various places including the US. It is hideously, hideously difficult to move from one country to another, unless protected by a corporation, massive wealth, or endowed with massive patience (15 years preparation and planning would be a good start). The EU was one exception but even this small freedom is now breaking down.

    Most people here have traveled abroad but most never seem to have tried moving country, on their own. Successfully migrating as a middle class migrant from one Western country (say, France) to another (say, Australia) is only marginally easier than doing it as a Syrian refugee. Sometimes, it’s harder (no obvious compassionate reason to let you in). And if you cut corners, then things happen to you as they did to this lady.

  36. Gravatar of dtoh dtoh
    11. February 2017 at 00:00

    Scott,

    A weak yuan is not the same thing as a strong dollar.

    The Chinese do manipulate their currency.

    A discussion about the impact of fx rate changes on aggregate utility is totally different than making a value judgement as to whether a particular fx related non-pareto optimization (moving manufacturing jobs to China) is a good thing or not. As Donald would say even a dumb high school student would understand the difference…. so please stop pretending like there’s some kind of contradiction.

    If we’re talking about economic ignorance, Cohn is a frigging Einstein compared to the proponents of higher minimum wage rates.

    Please stop making me defend Trump. I’m not a fan especially after the immigration debacle, but your anti-Trump screeds are just ludicrous.

    Yes, Trump is brash, arrogant, superficial and annoying, but for goodness sake turn on the TV or go chat with students at Newton North. Why would you expect anything different from our politicians.

    When my Japanese friends tell me they have bad leaders, I always tell them “No you have bad voters.”

    And IMHO, the voters who supported Hillary and Bernie were even worse.

    Would it be possible to move the political blogging to Econblog where I can ignore it.
    :-)

  37. Gravatar of dtoh dtoh
    11. February 2017 at 00:05

    @Matthew Moore

    “I often say that truly selfless people should not work for charities.”

    Totally agree, but if you want to keep your liberal friends, I would strongly recommend you not suggest that to them. It turns their brains into scrambled eggs and they will treat you like a rabid snapping turtle.

  38. Gravatar of dtoh dtoh
    11. February 2017 at 00:11

    @Jim Glass

    I would be cautious about blaming particular immigration actions on Trump. The DHS has always had a lot of brown shirts. As I have said before, it’s has the lowest minimum IQ requirement of any official job in the U.S. that lets you carry a gun.

  39. Gravatar of Ray Lopez Ray Lopez
    11. February 2017 at 09:55

    @Ben Cole – notice even before the Plaza Accord the dollar was falling. The Fed and most central banks follow the market. I’ve heard Japan’s central bank is very ‘cowardly’ about Fx interventions (i.e., they follow the market). “Don’t fight the Fed” simply is a momentum rule that really means ‘don’t fight which way the market is going’ and as such has validity (momentum strategies do work, slightly, it’s been shown empirically) but not much (trading costs will eat up your profits often).

    PS–Sumner is so deranged, see his post to me above, that he feels I’m attacking him when in fact I’m agreeing that perhaps for small countries like Switzerland, money is NOT neutral, and has real effects (talking about the Dec 2014 CH franc unlinking to the euro and 2015 Q1 down quarter for CH GDP). Sumner: “Thank God that Trump doesn’t drink” – Me: Thank God that Mad Dog Sumner does drink, it’s fodder for the rest of us.

  40. Gravatar of ssumner ssumner
    11. February 2017 at 15:45

    Ray, Tell me again about that Swiss “devaluation”.

    Ben, Ten billion bucks will make the dollar fall in half?? Well why didn’t you say so!! The Chinese intervene in the trillions; what would that do?

    dtoh, You said:

    “A weak yuan is not the same thing as a strong dollar.”

    I’m continually perplexed by the lengths people will go to defend Trump’s idiocy.

  41. Gravatar of Steve F Steve F
    11. February 2017 at 15:58

    morgan is correct. didn’t happen.

  42. Gravatar of dtoh dtoh
    11. February 2017 at 16:38

    Scott,
    They say logical skills go first then basic arithmetic skills.

    If the dollars falls 20% against every currency except that it rises 10% versus the yuan, would you describe that as a strong dollar?

  43. Gravatar of Postkey Postkey
    12. February 2017 at 04:31

    “How the Trump regime was manufactured by a war inside the Deep State
    A systemic crisis in the global Deep System has driven the violent radicalization of a Deep State faction”

    https://medium.com/insurge-intelligence/how-the-trump-regime-was-manufactured-by-a-war-inside-the-deep-state-f9e757071c70#.gcakmj1dm

  44. Gravatar of Ray Lopez Ray Lopez
    12. February 2017 at 07:24

    @Sumner – “Ray, Tell me again about that Swiss “devaluation”.” – the CH cb delinked the CH franc from the EU euro in Jan 2015. Read more here: https://en.wikipedia.org/wiki/Swiss_franc#2011.E2.80.932014:_big_movements_and_capping Switzerland suffered a small downturn in CH GDP in Q1 of 2015 from the CH franc going up in value, hurting exports a bit, and possibly hurting bank deposits from EU members (since 1 Euro was worth fewer Swiss francs). All of this is online. You tell me where you’re going. I’m helping your “money illusion” and “money non-neutrality” theory. I’m your friend here, you fiend. You’re so belligerent, you can’t even recognize your own ally. Mind you, I’m not prepared to say money is not neutral for larger countries not so heavily dependent on single industries, like banking or watches in Switzerland. I’m not even sure the Swiss example is apt. You should do a column on this, it supports your nutty NGDPLT theory.

  45. Gravatar of ssumner ssumner
    14. February 2017 at 14:30

    dtoh, You missed the point, he doesn’t even know whether stronger or weaker is better, so how can he possibly have an opinion on the yuan?

    Here’s Trump: “I have no idea whether a strong or weak dollar is good, but I KNOW that a weak yuan is bad.” Okaaaaay.

    Ray, There are days where I think you are just pretending to be an idiot. No one can be this dumb.

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